Q4. Process Costing – Transferred-in costs, WA.
Buster Dog Treats has two departments, Mixing and Packaging. Each unit of product is a 1 kg bag of dog treats.
The Packaging department started in December with opening work in process inventory of 20,000 kilograms of dog treats – 40% complete as materials and 20% complete as to conversion in the Packaging department. This inventory had $24,000 of transferred-in costs, $6,000 of Packaging material costs, $5,000 of Packaging labour costs and $3,000 of Packaging overhead.
During December, Packaging received a further 100,000 kilograms from Mixing at a cost of $120,000 (transferred-in costs).
Packaging also incurred $34,500 of material cost, $27,600 of labour, and $16,100 of overhead during the month of December.
At the end of December, Packaging had ending work in process inventory of 5,000 kilograms. These units were 20% complete with respect to material, and 10% complete as to labour and overhead.
(TIP: Conversion costs are direct labour and overhead costs combined. Your process cost report should show conversion costs).
Required
Using the Weighted Average method, prepare a process cost report (following the 4 steps outlined in your lecture notes) for the Packaging department for December. Prepare a journal entry that transfers the goods from the Packaging department to finished goods.
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