Question - PROCESS COSTING
The U2 Company uses process costing in its only department. This problem will cover 3 months. All information in this paragraph relates to all 3 months. All direct materials are added at the beginning of processing. Spoilage is detected at the 60% point in processing. The company accepts up to 4% of the good units started during each month as normal spoilage. Any spoilage above this point is considered to be abnormal spoilage.
September. The company began operations in September. During the month, 18,000 units were started, but only 14,000 units were completed. The ending work in process consisted of 4,000 units that were 25% complete as to processing. There was no spoilage during September. Unit costs for September were $11 for direct materials and $15 for conversion.
A. How much total cost would be charged to the ending Work in Process for September?
October. There were 36,000 units started in October and 30,000 units completed in October. The ending Work in Process consisted of 7,000 units that were 70% complete as to processing. Costs incurred during October were $373,248 for direct materials and $524,383 for conversion. Use FIFO for October.
A. Prepare an equivalent units chart for October (FIFO).
B. Compute the unit costs for October (FIFO).
C. Compute the Cost of Goods Manufactured for October (FIFO).