MA26 Problem: Process Costing – Transferred In Costs and Spoilage – Rauz

MA26 Problem: Process Costing – Transferred In Costs and Spoilage – Rauz

Rauz Incorporated (“RI”) uses process costing in each of its two manufacturing departments,Department A and Department B. Once units have been processed in Department A, they aretransferred to Department B for finishing.Material is added at the beginning of the process in Department A and at 75% 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 8% inDepartment B. The units are inspected at 85% completion in Department A and at 95%completion in Department B.In the current period beginning WIP in Department A was 3,100 units (70% complete). Thisinventory incurred direct material costs of $21,700 and conversion costs of $11,935. The beginning WIP in Department B was 4500 units ( 60% completed). Department B’s beginningWIP transferred in cost was $24,000 and $46,000 in conversion.During the current period, in Department A 64,400 units were started, 60,000 units weretransferred out of Department A to Department B, and ending WIP in Department A was 4,000units (35% completed). In Department B 60,000 units were transferred in and 52,000 units weretransferred to finished goods, and ending WIP inventory was 6,500 units (80% completed).Costs incurred in each of the departments during the current period are:Department ADepartmentBMaterial $183,300 $1,080,000Labour and Overhead $131,675 $617,000

Required

Using FIFO costing method, calculate following for both Department A and B the:

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Costs of goods manufactured

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Spoiled units

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Cost of ending WIP

Round the cost per equivalent unit to five decimal places