PROBLEM - Brandon Processing Company produces a product by passing it through a moulding process and then through an assembly process. Brandon uses the Weighted Average Method for process costing. Information related to manufacturing activities during July follows:
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RAW MATERIALS:
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Beginning inventory
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$100,000
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Raw materials purchased on credit
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300,000
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Direct materials used in moulding
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(190,000)
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Direct materials used in assembling
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(88,600)
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Indirect materials used
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(51,400)
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Ending Inventory
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$70,000
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FACTORY PAYROLL:
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Direct labour used in moulding
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$42,000
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Direct labour used in assembling
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55,375
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Indirect labour used
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50,625
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Total payroll cost (paid with cash)
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$148,000
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FACTORY OVERHEAD INCURRED:
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Indirect materials used
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$51,400
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Indirect labour used
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50,625
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Other overhead costs
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71,725
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Total factory overhead incurred
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$173,750
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FACTORY OVERHEAD APPLIED:
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Moulding (150% of direct labour)
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$63,000
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Assembling (200% of direct labour)
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110,750
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Total factory overhead applied
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$173,750
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MOULDING DEPARTMENT:
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Beginning work in process inventory (units)
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8,000
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Percentage completed - materials
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100%
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Percentage completed - labour and overhead
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60%
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Units started and completed
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17,000
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Ending work in process inventory (units)
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8,000
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Percentage completed - materials
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100%
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Percentage completed - labour and overhead
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25%
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Costs:
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Beginning in process inventory (Materials: $40,000, Direct Labour $10,000, Overhead $3,000)
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$53,000
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Direct materials added
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190,000
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Direct labour added
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42,000
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Overhead applied (150% of direct labour)
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63,000
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Total costs
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348,000
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ASSEMBLING DEPARTMENT:
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Beginning work in process inventory
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$154,800
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Ending goods in process inventory
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108,325
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FINISHED GOODS INVENTORY:
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Beginning inventory
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$96,400
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Costs transferred in from assembling
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578,400
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Cost of goods sold
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(506,100)
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Ending inventory
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$168,700
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Required:
1. Compute the equivalent units of production for the moulding department for July, and determine the costs per equivalent unit for direct materials, direct labour, and overhead.
2. Compute the cost of the units transferred from moulding to assembling during the month and the cost of the ending work in process inventory for the moulding department.
3. Prepare summary journal entries to record the events of July.