Problem
Silver Spoon Incorporated is a manufacturer of kitchen utensils. It produces all of its products in one department. The information for the current month is as follows:
Beginning work in process 37,500 units
Units started 55,000 units
Units completed 75,000 units
Ending work in process 14,500 units
Spoilage 3,000 units
Beginning work-in-process direct materials $25,000
Beginning work-in-process conversion $ 10,000
Direct materials added during month $113,750
Direct manufacturing labor during month $40,020
Beginning work in process was 25% complete as to conversion. Direct materials are added at the beginning of the process. Factory overhead is applied at a rate equal to 37.5% of direct manufacturing labor. Ending work in process was 60% complete. All spoilage is normal and is detected at the end of the process.
Required:
Prepare a production cost worksheet if spoilage is recognized and the weighted-average method is used. (3 marks)
Why is cost accumulation easier under a process costing system than under a job order costing system? Discuss and use examples to support your discussion.