MA25 Problem:Process Costing – Transferred In Costs and Spoilage – Jerdi’s

MA25 Problem:Process Costing – Transferred In Costs and Spoilage – Jerdi’s

Jerdi’s Manufacturing Limited (“JML”) uses process costing in each of its two manufacturingdepartments, Department A and Department B. Once units have been processed in DepartmentA, they are transferred to Department B for finishing.Material is added at the beginning of the process in Department A and at 98% completion inDepartment B. Labour and overhead costs occur evenly throughout the process in bothDepartment A and B. Normal spoilage is 5% of good units in Department A and 4% inDepartment B. The units are inspected at 90% completion in Department A and at 95% inDepartment B.In the current period beginning WIP in Department A was 4000 units (75% completed). Thisinventory incurred direct material costs of $42,000 and conversion costs of $21,000. The beginning WIP in Department B was 2500 units (70% complete). Department B’s beginningWIP cost consists of transferred in costs of $45,500 and conversion costs of $26,250 in.During the current period, in Department A 20,000 units were started, 19,000 units weretransferred out of Department A to Department B, and ending WIP in Department A was 3,500units (80% completed). In Department B, 17,500 units were transferred to finished goods, andending WIP inventory was 3,000 units (85% completed).Costs incurred in each of the departments during the current period are:Department ADepartmentBMaterial $200,000 $42,875Labour and Overhead $165,230 $271,250

Required:

1. Using FIFO calculate for both Department A and B the:

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Cost of goods transferred

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Spoiled units

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Cost of Ending WIP

2. Using weighted average calculate for both Department A and B the:

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Cost of goods transferred

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Spoiled units

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Cost of ending WIPRound the cost per equivalent unit to five decimal places