Preparation of Product Cost and analyzing Wastage, Spoilage.
Frank's Chips uses the weighted-average method to account for its WIP inventories. The accounting records show the following information for a particular day:
Beginning WIP inventory:
Direct materials ...................................................... $ 488
Conversion costs..................................................... 138
Current period costs in work in process
Direct materials..................................................... $5,720
Conversion costs ................................................... 3,322
Quantity information is obtained from the manufacturing records and includes the following.
Beginning inventory............................................ 150 units (partially complete)
Current period units started ............................... 1,000 units
Ending inventory ................................................. 300 units
Percentage of completion
Direct materials................................... 40%
Conversion costs .................................. 20%
Spot age ............................................................. 100 units
Percentage of completion
Direct materials ................................................. 100%
Conversion costs ................................................ 100%
Required:
Compute the cost of good units completed and transferred out, spoilage, and ending inventory using the eighted-average method.