Quiz 6: Process Costing
Business
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Process Costing Process costing is a costing system where costs are accumulated as per the process and department and then assigns the cost to the homogeneous products. It is called as a process costing because cost is calculated process or department wise instead of product wise in this system. Characteristics of company using process costing: 1. Homogeneous products: Companies which uses process costing produces homogeneous products only because then only they can use same process again and again. 2. Mass production of goods: In process costing manufacturer produces goods in masses which go through the similar processes. 1. Continuous production: Process costing is used by companies where process is continuous i.e. output of one process will become input of next process. 2. Product requires to goes through different processes: Process costing can only be used if product is required to go through different processes. If only single process is required than process costing will not be applicable.
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Process Costing Process costing is a costing system where costs are accumulated as per the process and department and then assigns the cost to the homogeneous products. It is called as a process costing because in process costing, cost is calculated process or department wise instead of product wise. Types of industries that uses process costing: In manufacturing organization process costing is used by the organization which uses the same produces the almost identical products and requires to be went through more than one process. Examples of such industries are rubber, mining, automobile production lines, electronics etc. Further, process costing is also used in service sector where service provided is of repetitive nature and homogeneous to each other. Example in service industry is check clearing service in a bank which uses same set of process every time a check is cleared.
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Costing: Costing refers to the calculating cost of the product using various techniques. Costing is used to assign and allocate the cost at the various stages of production because a product goes through various stages before reaching to stage of final product. Difference between job costing and process costing: 1. Job costing refers to the calculation cost of a product or service which is done as per the client's need whereas process costing refers to the calculation of cost based on process used in the manufacturing process. 2. Standardized products are produced in job costing whereas homogeneous products are produced in process costing. 3. In job costing cost is ascertained at the end of each job whereas in process costing cost is computed at the end of the process only. 4. Work in progress may not exist in Job costing but in process costing work in progress will always exists due to the transfer from one process to another. 5. Job costing is generally used in service industry but process costing is mainly used in manufacturing concern.
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Q 5Q 5
How is the equivalent unit calculation affected when direct materials are added at the beginning of the process rather than uniformly throughout the process
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Q 6Q 6
What is a production cost report What are the five key steps in preparing a production cost report
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Q 7Q 7
What is the distinction between equivalent units under the FIFO method and equivalent units under the weighted-average method
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Q 8Q 8
Identify the conditions under which the weighted-average method of process costing is inappropriate.
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Q 9Q 9
Specify the advantage of the weighted-average method of process costing in contrast to the FIFO method.
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Q 10Q 10
From the standpoint of cost control, why is the FIFO method superior to the weighted-average method Is it possible to monitor cost trends using the weighted-average method
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Q 12Q 12
Suppose that manufacturing is performed in sequential production departments. Prepare a journal entry to show a transfer of partially completed units from the first department to the second department. Assume the amount of cost transferred is $50,000.
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Q 13Q 13
Under the weighted-average method, all units transferred out are treated the same way. How does this differ from the FIFO method of handling units transferred out
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Q 14Q 14
Under the FIFO method, only current period costs and work are included in unit costs and equivalent units computation. Under the weighted-average method, what assumptions are made when unit costs and equivalent units are computed
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Q 22Q 22
Beginning work-in-process is 2,000 units; units completed is 44,000 units, and ending work-in- process is 3,000 units, which are 100 percent complete for materials and 50 percent complete for conversion costs. The beginning work-in-process inventory is 100 percent complete for materials and 50 percent complete for conversion.
a. What are the equivalent units for materials and conversion using the weighted average method
b. What are the equivalent units for materials and conversion using the FIFO method
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Q 23Q 23
Cost per equivalent unit is $2 per EU for materials and $3 per EU for conversion. There are no trans- ferred-in costs and no spoilage. What is the cost of goods completed if 10,000 units are completed and 1,000 are in ending inventory
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Q 24Q 24
Abnormal spoilage is 100 units and normal spoilage is 400 units. Beginning work-in-process inventory consisted of 5,000 units; 20,000 units were started; and 22,000 units were completed this period. How many units are in ending work-in-process
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Q 25Q 25
The number of abnormal spoiled units is 300 and the cost per equivalent unit is $2 for materials and $3 for conversion. The inspection point is at the end of processing. There are 600 units in ending work-in- process and 200 normal spoiled units. What is the cost of spoilage shown separately on the cost report
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Q 26Q 26
There is no spoilage, the beginning work-in-process inventory is 6,000 units, and the ending work-in- process inventory is 4,000 units for the second department in a two department process. What is the number of units transferred in to the second department if good output of the second department is 35,000 units
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Q 27Q 27
Process Costing in Process Industries Process costing is a good fit for companies in process industries in which costs are more easily traced to production departments than to individual products. The products are generally produced on a continuous, mass production basis. Process industries often involve the production of a commodity product, and the companies in these industries usually have a small number of relatively homogeneous products.
Required Give some examples of companies that would use process costing, and explain why.
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Q 28Q 28
Equivalent Units; Weighted-Average Method Washington State Fisheries, Inc., processes salmon for various distributors. Two departments, processing and packaging, are involved. Data relating to tons of salmon sent to the processing department during May follow:
Required
1. Calculate the number of tons completed and transferred out during the month.
2. Calculate the number of equivalent units for both materials and conversion for the month of May, assuming that the company uses the weighted-average method.
3. How would your answer in part 2 change if the percentage of completion in ending inventory were as follows: materials 30%, conversion 40%
4. Explain briefly why process costing is appropriate in the fish processing industry.
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Q 29Q 29
Process Costing in Sugar Manufacturing The food-processing industry, as for most process industries, is a common user of process costing. Consider for example the sugar manufacturing industry. The processes in sugar manufacturing can differ depending on the agricultural product used to produce sugar. When sugar cane is used, the sequence of processes looks something like this:
First: Cane shredding The sugar cane is shredded into small pieces to facilitate its movement through the milling machine.
Second: Milling The shredded cane is crushed between the rollers in the milling machine to produce the cane juice.
Third: Heating and adding lime In this step, the cane juice is heated to concentrate the
juice, and lime is added to reduce acidity.
Fourth: Clarifying Impure elements are removed from the juice.
Fifth: Evaporating and Separating. Here the juice is heated, vacuum is applied, and the
liquid is centrifuged to remove the molasses and to produce what is called raw sugar.
Sixth: Crystallizing The raw sugar is melted and carbon-filtered to produce the refined
sugar.
Seventh: Drying. The refined sugar is dried and made ready for packaging.
Due to the nature of the seven processes, there is a relatively large amount of work-in-process inventory at any point in time. Also, sugar cane and raw sugar commodity prices can be stable for a period of time but there are periods of high volatility caused by, for example, India's mandate in 2007 to develop ethanol fuel; or the supply/demand imbalance in 1980 that sent prices up. Also, government price supports, import restrictions, and quotas affect the price of sugar cane. For example, as part of its development policy, the EU in recent years paid above market rates for sugar from a number of African, Caribbean, and Pacific countries, many of them former colonies of European countries.
Required
1. Are firms that produce sugar likely to incur transferred-in costs Why or why not
2. Should a sugar producer use the FIFO or the weighted-average method for the process cost report Explain your answer.
3. Identify and explain any sustainability issues for the production of sugar.
4. Identify and interpret the significance of any global issues for the production of sugar.
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Equivalent Units; Weighted-Average Method Northern Washington Lumber Company grows, harvests, and processes timber for use as building lumber. The following data pertain to the company's sawmill:
During the year the company started 180,000 units in production.
Required Prepare a physical flow schedule and compute the number of equivalent units of both direct materials and conversion for the year, using the weighted-average method.
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Q 31Q 31
Equivalent Units; Weighted-Average and FIFO Methods Murray Chemical Company refines a variety of petrochemical products. These data are from the firm's Houston plant:
Required Compute the equivalent units of direct material and conversion for the month of September. Use both the weighted-average and the FIFO methods.
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Equivalent Units; Weighted-Average and FIFO Methods Holly Company has the following information for December 1 to December 31. All direct materials are 100% complete.
Required Calculate equivalent units using the weighted-average and FIFO methods.
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Q 33Q 33
Equivalent Units; Weighted-Average Unit Cost Perrette Motor Company rebuilds automobile engines that have been damaged or are in need of extensive repair. The rebuilt engine has a 100,000-mile warranty and is purchased by auto shops, large motor pools in companies and governmental units, and some individual auto owners. The Dayton plant at Perrette specializes in the Ford V6 engine. Approximately 600 to 800 engines are rebuilt each month, and the costs of the plant are assigned to monthly production using weighted-average process costing. The current month began with a work-in-process inventory of 100 engines which were 50% complete for materials and 50% complete for conversion costs. The materials cost in beginning work-in process was $50,000, while the conversion cost was $60,000. A total of 500 engines were completed and shipped out during the month, and total materials cost of $550,000 and conversion cost of $640,000 were incurred during the month. The ending work-in-process of 200 units was 50% complete for materials and 30% complete for conversion costs.
Required Compute the cost per equivalent unit for materials and conversion for the month.
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Q 34Q 34
Equivalent Units; Weighted-Average and FIFO Unit Cost Pablo Company calculates the cost for an equivalent unit of production using process costing.
Required
1. Compute cost per equivalent unit for both the weighted-average and FIFO methods.
2. Explain the difference between the FIFO and weighted-average unit costs.
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Q 35Q 35
FIFO Method Taxes R Us (TRU), an income tax preparation firm, uses the FIFO method of process costing for the monthly reports. TRU has no materials cost in the preparation of the returns. The following shows its March information:
Required Calculate the following amounts for conversion costs using the FIFO method:
1. Equivalent units.
2. Cost per equivalent unit.
3. Cost of completed returns for the month of March.
4. Cost of returns in process as of March 31.
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Q 36Q 36
Weighted-Average Method Gifford, Inc. produces a single model of a popular cell phone in large quantities. A single cell phone moves through two departments, assembly and testing. The manufacturing costs in the assembly department during March follow:
The assembly department has no beginning work-in-process inventory. During the month, it started 25,000 cell phones, but only 22,000 were fully completed and transferred to the testing department. All parts had been made and placed in the remaining 3,000 cell phones, but only 60 percent of the conversion had been completed. The company uses the weighted-average method of process costing to accumulate product costs.
Required
1. Compute the equivalent units and cost per equivalent unit for March in the assembly department.
2. Compute the costs of units completed and transferred to the testing department.
3. Compute the costs of the ending work-in-process.
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Q 37Q 37
Weighted-Average Method Weatherly Lumber Company processes wood pulp for manufacturing various paper products. The company employs a process costing system for its manufacturing operations. All direct materials are added at the beginning of the process, and conversion costs are incurred uniformly throughout the process. This is the company's production schedule for May:
The following cost data are available:
Required
1. Calculate equivalent units of direct materials and conversion during May. Use the weighted-average method.
2. Calculate the cost per equivalent unit for both direct materials and conversion during May. Use the weighted-average method.
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Q 38Q 38
FIFO Method Refer to the information in Problem 6-37.
Required Complete Problem 6-37 using the FIFO method.
Reference:
Weighted-Average Method Weatherly Lumber Company processes wood pulp for manufacturing various paper products. The company employs a process costing system for its manufacturing operations. All direct materials are added at the beginning of the process, and conversion costs are incurred uniformly throughout the process. This is the company's production schedule for May:
The following cost data are available:
Required
1. Calculate equivalent units of direct materials and conversion during May. Use the weighted-average method.
2. Calculate the cost per equivalent unit for both direct materials and conversion during May. Use the weighted-average method.
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Q 39Q 39
Weighted-Average Method Cuevas Company manufactures a single product that goes through two processes, mixing and cooking. These data pertain to the mixing department for August:
Material X is added at the beginning of work in the mixing department. Material Y is also added in the mixing department, but not until product units are 60 percent complete with regard to conversion. Conversion costs are incurred uniformly during the process. The company uses the weighted-average cost method.
Required
1. Calculate equivalent units of material X, material Y, and conversion for the mixing department.
2. Calculate costs per equivalent unit for material X, material Y, and conversion.
3. Calculate the cost of units transferred out.
4. Calculate the cost of ending work-in-process inventory.
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Q 40Q 40
Weighted-Average Method R. Chen Company manufactures a variety of natural fabrics for the clothing industry in a suburb of Shanghai. The following data in Chinese currency called yuan pertain to the month of October.
During October, 180,000 units were completed and transferred out. At the end of the month, 30,000 units (direct materials 80% and conversion 40% complete) remain in work-in-process inventory.
Required Calculate each of the following amounts using weighted-average process costing.
1. Equivalent units of direct materials and conversion.
2. Unit costs of direct materials and conversion.
3. Cost of goods completed and transferred out during October.
4. Cost of the work-in-process inventory at October 31.
5. Check the most recent issue of The Wall Street Journal or go to http://www.federalreserve.gov/ releases/H10/hist/ to learn the exchange rate between the U.S. dollar and the Chinese yuan.
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Q 41Q 41
Weighted-Average Method; Transferred-in Costs McCallum Tool Company has two departments, assembly and finishing. The assembly department takes purchased parts and assembles the final product. The finishing department performs testing and adds other materials and packages the product. Direct materials are added at the end of the process in the finishing department. The following summarizes the finishing department's operations for the month of July.
Required Calculate each of the following amounts for the finishing department using the weighted average process costing method:
1. Equivalent units of transferred-in, direct materials, and conversion.
2. Unit costs of transferred-in, direct materials, and conversion.
3. Cost of goods completed and transferred out during July.
4. Cost of work-in-process inventory at July 31.
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Q 42Q 42
Reconditioning Service; Weighted-Average Method Golf World Inc. (GWI) sells products and services for the sport of golf. One of its key business units specializes in the repair and reconditioning of golf carts. GWI enters into contracts with a number of golf clubs throughout the U.S. in which the clubs send their carts to GWI for a complete recondition: motor, frame repair where necessary, and replacement of seat covers and canvas tops. The clubs usually will cycle 10-15 percent of their carts through this process each year. Because GWI's business has been growing steadily, it is very important to complete the reconditioning of the carts within a budgeted time and cost. The firm uses weighted-average process costing to keep track of the costs incurred in the reconditioning process.
GWI's golf cart operations has the following information for the month of November, in which 1,200 carts were started for reconditioning:
Required
1. Complete the cost report for the month of November.
2. GWI is scheduled to start another batch of 1,500 carts for reconditioning in December. Comment on the information the cost report contains regarding planning for December's work.
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Q 43Q 43
Weighted-Average Method Bellisario Company has a department that manufactures wood trusses (wood frames used in the construction industry). The following information is for the production of these trusses for the month of February:
Required Using the weighted-average method, calculate the following:
1. Costs per equivalent unit.
2. Cost of goods completed and transferred out.
3. Cost remaining in the ending work-in-process inventory.
4. Assume that you are the company's controller. The production department's February unit cost is higher than standard cost. If the manager of the first department asks you to do him a favor by increasing the ending inventory completion percentage from 40 to 60% to lower the unit costs, what should you do How much would unit cost be affected by this request
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Q 44Q 44
FIFO Method Refer to the information in problem 6-43.
Required Repeat Problem 6-43 using the FIFO method.
Reference:
Weighted-Average Method Bellisario Company has a department that manufactures wood trusses (wood frames used in the construction industry). The following information is for the production of these trusses for the month of February:
Required Using the weighted-average method, calculate the following:
1. Costs per equivalent unit.
2. Cost of goods completed and transferred out.
3. Cost remaining in the ending work-in-process inventory.
4. Assume that you are the company's controller. The production department's February unit cost is higher than standard cost. If the manager of the first department asks you to do him a favor by increasing the ending inventory completion percentage from 40 to 60% to lower the unit costs, what should you do How much would unit cost be affected by this request
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Q 45Q 45
Weighted-Average Method; Transferred-in Costs Sanyo Corporation manufactures a popular model of business calculators in a suburb of Seoul, South Korea. The production process goes through two departments, assembly and testing. The following information (in thousands of South Korean currency, the won ) pertains to the testing department for the month of July.
During the month of July, 15,000 units were transferred in from the assembly department at the cost of 141,700 won, and the testing department added costs of 201,820 won.
During the month, 18,000 units were completed and transferred to the warehouse. At July 31, the completion percentage of work-in-process was as follows:
Required
1. Prepare the production report of the testing department for the month of July using the weighted-average process costing.
2. Check the most recent issue of The Wall Street Journal or www.federalreserve.gov/releases/H10/hist/ to learn the exchange rate between the U.S. dollar and the South Korean won.
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Q 46Q 46
FIFO Method; Two Departments Bhatti Company produces plastic photo frames. Two departments ,molding and finishing, are involved in the manufacturing. The molding department fills the molds with hot liquid plastic that is left to cool and then opens them. The finishing department removes the plastic frame from the mold and strips the edges of the frames of extra plastic. The following information is available for the month of January:
The work-in-process inventory in the finishing department is estimated to be 40% complete for conversion both at the beginning and end of January. Costs of production for January follow:
The molding department started 50,000 pounds of product in January. The firm uses the FIFO method of process costing.
Required Prepare a report for both the molding and finishing departments for the month of January. The report should include equivalent units of production (in pounds), total manufacturing costs, cost per equivalent unit (pounds), cost of ending work-in-process inventory, and cost of goods completed and transferred out.
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Weighted-Average Method; Two Departments Porter Company manufactures its one product by a process that requires two departments. The production starts in department A and is completed in department B. Materials are added at the beginning of the process in department A. Additional materials are added when the process is 50 percent complete in department B. Conversion costs are incurred proportionally throughout the production processes in both departments.
On April 1, department A had 500 units in work-in-process estimated to be 30 percent complete for conversion; department B had 300 units in work-in-process estimated to be 40 percent complete. During April, department A started 1,500 units and completed 1,600 units; department B completed 1,400 units. The work-in-process ending inventory on April 30 in department A is estimated to be 20 percent complete, and the work-in-process ending inventory in department B is estimated to be 70 percent complete.
The cost sheet for department A shows that the units in the work-in-process beginning inventory had $3,000 in direct materials costs and $1,530 in conversion costs. The production costs incurred in April were $12,000 for direct materials and $10,710 for conversion. Department B's work-in-process beginning inventory on April 1 was $6,100, of which $4,200 was transferred-in costs; it incurred $38,000 in direct materials costs and $24,350 in conversion costs in April.
Porter Company uses the weighted-average method for departments A and B.
Required
1. Prepare a production cost report for department A.
2. Prepare a production cost report for department B.
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Q 48Q 48
Weighted-Average Process Costing; Spoilage (Appendix) Alexander Paint Company, which manufactures quality paint to sell at premium prices, uses a single production department. Production begins by blending the various chemicals that are added at the beginning of the process and ends by filling the paint cans. The gallon cans are then transferred to the shipping department for crating and shipment. Labor and overhead are added continuously throughout the process. Factory overhead is applied at the rate of $3 per direct labor dollar. The company combines labor and overhead in computing product cost.
Prior to May, when a change in the manufacturing process was implemented, work-in-process inventories were insignificant. The changed manufacturing process, which has resulted in increased equipment capacity, allows increased production but also results in considerable amounts of work in- process inventory. Also, the company had 1,000 spoiled gallons in May-one-half of which was normal spoilage and the rest abnormal spoilage. The product is inspected at the end of the production process.
These data relate to actual production during the month of May:
Required
1. Prepare a production cost report for May using the weighted-average method.
2. Was the change in the manufacturing process to increase capacity an appropriate strategic move for the company Why or why not
3. How does the change in manufacturing process potentially affect the company's sustainability performance
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Q 49Q 49
Spoilage; Weighted-Average Method; Transferred-in Costs (Appendix) APCO Company manufactures various lines of bicycles. Because of the high volume of each line, the company employs a process cost system using the weighted-average method to determine unit costs. Bicycle parts are manufactured in the molding department and then are consolidated into a single bike unit in the molding department and transferred to the assembly department where they are assembled. After assembly, the bicycle is sent to the packing department.
Annual cost and production figures for the assembly department are presented in the schedules that follow the requirements.
Defective bicycles are identified at the inspection point when the assembly labor process is 70% complete; all assembly materials have been added at this point. The normal rejection for defective bicycles is 5% of the bicycles reaching the inspection point. Any defective bicycles above the 5% quota are considered to be abnormal. All defective bikes are removed from the production process and destroyed.
Required
1. Compute the number of defective, or spoiled, bikes that are considered to be
a. Normal.
b. Abnormal.
2. Compute the equivalent units of production for the year for
a. Bicycles transferred in from the molding department.
b. Bicycles produced with regard to assembly material.
c. Bicycles produced with regard to assembly conversion.
3. Compute the cost per equivalent unit for the fully assembled bike.
4. Compute the amount of the total production cost of $1,672,020 that will be associated with the following items:
a. Normal spoiled units.
b. Abnormal spoiled units.
c. Good units completed in the assembly department.
d. Ending work-in-process inventory in the assembly department.
5. Describe how to present the applicable dollar amounts for the following items in the financial statements:
a. Normal spoiled units.
b. Abnormal spoiled units.
c. Completed units transferred in to the packing department.
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Q 50Q 50
Process Costing and Activity-Based Costing Hampton Chemical Specialties, Inc. (HCS) is a manufacturer of specialty chemicals sold to manufacturers, hospitals, and other users. HCS produces 10 to 15 million gallons of its main product HCS-22 each month. The data for July follows (in thousands of gallons). The chemical raw materials are added at the beginning of processing.
Each month HCS averages 100 batches of product with approximately 12,000 gallons per batch, though some batches are as large as 50,000 gallons or more, and some are as small as a few hundred gallons. Also, the pattern of customer orders is that large orders come in at all times of the month, while small orders tend to cluster around the last few days of the month. The small orders are due to salespersons trying to meet monthly sales quotas and the buying patterns of smaller customers who want their shipments early in the following month. As a result, in the average month three-fourths of the total orders are started in the last few days of the month, and most are not completed until early in the following month. For example, in July, 100 batches were produced, and 75 were still in the ending work-in-process inventory at the end of the month. Ted Brown, plant controller for HCS, thinks that the current costing method, using weighted-average process costing, underestimates the cost of the ending work-in-process inventory as well as the cost of smaller jobs.
Required
1. Prepare the production cost report using the weighted-average method.
2. Assume that $28,500 of the $66,900 current conversion costs could be traced to batch-related activities such as equipment setup. Further, assume that these batch-related costs are all incurred when the batch is started. Ted has asked you to recalculate the production cost report to separate the batch-related costs from total conversion costs. How do the results differ from the method in requirement 1 Is Ted right about underestimating the cost of ending work-in-process inventory
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Q 51Q 51
FIFO Method and Rising Prices Healthy Selections Cereals Inc. (HSC) is a large food-processing company specializing in whole-grain, high-energy, low-calorie and low-fat cereals that appeal to the health-conscious consumer. HSC has a premium image in the market and most of its customers are loyal and willing to pay a bit extra to get the healthy choice that HSC offers. HSC's cereals are made in a series of processes which begin with sorting, cleaning, preparing, and inspecting the raw materials (grains, nuts, and other ingredients). The materials are then mixed and processed for consistency, cooked, given a final inspection, and packaged. Raw materials are added only at the beginning of the first process. The inspections in the first and final processes are made at the end of those respective processes, so all materials and conversion costs are lost for waste detected at the inspection point. The company uses weighted-average process costing and accounts for all waste as normal spoilage.
Currently commodity prices are rising sharply, affecting the costs of many of the ingredients in HSC's products. The CFO, noting the sharp rise in the cost of the company's raw materials (the ingredients for its products), has considered using the FIFO method.
The following data is for the first process for the current month. All output is measured in pounds.
The cost information for the first process is as follows:
Required
1. Calculate a process cost report for the first process using the weighted-average method.
2. Calculate a process cost report for the first process using the FIFO method.
3. Explain which of the two methods you would recommend to the CFO, considering the firm's competitive environment.
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Q 52Q 52
Weighted-Average Method; Two Departments Benoit Chemical Company (BCC) produces a variety of specialty chemicals used in the pharmaceutical industry and construction industry. BCC spends almost 20% of its net revenues on research, product development, and customer development to achieve its reputation as a high-quality producer of chemicals, a reliable supplier, and a great provider of customer service. BCC has a small number of large customers, each of which typically has one or more large orders being processed at BCC at any given point in time. These orders are typically completed over one to three months or longer. BCC uses job costing to keep track of total job costs over the duration of each order and process costing to keep track of monthly costs, department by department. The processing departments include mixing, reacting (in which chemicals are heated and sometimes vacuum is applied), cleaning, inspecting, packaging, and distribution. Much of the total product cost is accumulated in the first two processes, mixing and reacting. The following information is for activity and costs in the first two departments during the current month.
The mixing department started 74,000 gallons this month. No spoilage is measured in the mixing department, but a careful measure of the loss of material in reacting is taken after the completion of the reacting process. No materials are added in the reacting process. The number of gallons lost (spoilage) is considered normal spoilage and is considered to have lost the full cost of processing up to that point of inspection. BCC uses the weighted-average method for process costing.
Work-in-process for the two departments is as follows. Percentage completion for conversion costs is 60% in the mixing department for both beginning and ending inventory. The percentage completion for conversion costs for the reacting department for beginning and ending inventory is 30% and 40%, respectively.
Costs in the mixing department:
Transferred-in beginning work-in-process costs are $242,150 and conversion costs in the reacting department are as follows:
Required
1. Prepare the production cost report for the mixing department.
2. Prepare the production cost report for the reacting department.
3. What comments and observations do you have about the two departments' cost reports
4. What is Benoit's competitive strategy, based on Michael Porter's framework Explain whether or not you think the company's costing system supports this strategy.
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