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    Assignment 3: Spoilage in Weighted Average and FIFO Cost Flow Method

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    Kelvin Culajará
    This document contains 3 problems regarding spoilage in weighted average and FIFO cost flow methods. Problem 1 provides cost and unit data for Hanks Company that produces glass jars and asks to prepare cost of production reports and journal entries using weighted average and FIFO methods. Problem 2 provides similar data for Ortaleza Company that manufactures wine and asks to prepare reports and entries under different spoilage assumptions. Problem 3 provides multi-part data for El Mabalbon Company that manufactures smartphones and asks to prepare journal entries under various material addition point and cost flow method assumptions.

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    Assignment 3: Spoilage in Weighted Average and FIFO Cost Flow Method

    Uploaded by

    Kelvin Culajará
    316 views3 pages
    This document contains 3 problems regarding spoilage in weighted average and FIFO cost flow methods. Problem 1 provides cost and unit data for Hanks Company that produces glass jars and asks to prepare cost of production reports and journal entries using weighted average and FIFO methods. Problem 2 provides similar data for Ortaleza Company that manufactures wine and asks to prepare reports and entries under different spoilage assumptions. Problem 3 provides multi-part data for El Mabalbon Company that manufactures smartphones and asks to prepare journal entries under various material addition point and cost flow method assumptions.

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    PS 3 Spoilage

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    This document contains 3 problems regarding spoilage in weighted average and FIFO cost flow methods. Problem 1 provides cost and unit data for Hanks Company that produces glass jars and asks to prepare cost of production reports and journal entries using weighted average and FIFO methods. Problem 2 provides similar data for Ortaleza Company that manufactures wine and asks to prepare reports and entries under different spoilage assumptions. Problem 3 provides multi-part data for El Mabalbon Company that manufactures smartphones and asks to prepare journal entries under various material addition point and cost flow method assumptions.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    316 views3 pages

    Assignment 3: Spoilage in Weighted Average and FIFO Cost Flow Method

    Uploaded by

    Kelvin Culajará
    This document contains 3 problems regarding spoilage in weighted average and FIFO cost flow methods. Problem 1 provides cost and unit data for Hanks Company that produces glass jars and asks to prepare cost of production reports and journal entries using weighted average and FIFO methods. Problem 2 provides similar data for Ortaleza Company that manufactures wine and asks to prepare reports and entries under different spoilage assumptions. Problem 3 provides multi-part data for El Mabalbon Company that manufactures smartphones and asks to prepare journal entries under various material addition point and cost flow method assumptions.

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    Ateneo de Zamboanga University

    SCHOOL OF MANAGEMENT AND ACCOUNTANCY


    Accounting 206: Cost Accounting and Cost Management, Part II

    Assignment 3: Spoilage in Weighted Average and FIFO Cost Flow Method

    KELVIN JALUAG CULAJARA, BSA, CPA

    Problem 1: Hanks Company

    Hanks produces glass jars in a single department; the jars are then sold to
    candle manufacturers. All materials are added at the start of the process, and
    conversion costs are applied uniformly throughout the production process.
    Breakage commonly occurs at the end of the production process when a machine
    pushes air into the jars to form their openings. Hanks expects a minimum of 5
    percent of the units started into production to be “lost” during processing.
    The company uses weighted average method of calculating equivalent units.

    Jars      
    Beginning WIP inventory (60%
    complete) 12,000
    Started during the month 90,000
    Jars completed and transferred 79,200
    Ending WIP inventory (75% complete) 15,000

    Costs      
    Beginning WIP inventory
    Materials ₱ 16,230
    3,45
    Conversion 9 ₱ 19,689
    Current period
    Materials 101,745
    19,68
    Conversion 19,041 9
    Total costs to be accounted for ₱ 39,378

    Required:
    1. Prepare a cost of production report and the necessary journal entries
    assuming the company uses weighted average method.
    2. Prepare a cost of production report and the necessary journal entries
    assuming the company uses first-in, first-out method.
    Problem 2

    Ortaleza Company manufactures Strawberry Wine. All direct materials are added
    at the beginning of the production process. Goods are inspected at the end of
    the process. The following are additional cost and unit data:

    Physical Direct
      Units Materials Conversion Costs
           

    Work in process, beginning -    

    Started during May 5,000   s


           

    Transferred out 2,500    

    Work in process, ending 2,000    


           
    Cost of WIP beginning (in
    PHP)   - -
    Costs added during the
    period (in PHP)   135,000 66,500

    Conversion costs are 75% complete

     Prepare a cost of production report and the necessary journal entries


    assuming the company uses weighted average method, under each of the
    following assumptions:
    o Normal spoilage is 20% of the “good units”.
    o Normal spoilage is 10% of the “good units”.
    Problem 3

    El Mabalbon Company manufactures smartphones. Conversion costs are added


    evenly during the production process, and so ending work in process units are
    50% complete as to conversion costs. Some of the units are spoiled as they
    undergo the process. Normal spoiled units are usually equivalent to 15% of the
    “good units”. The following are the cost and unit data:

    Physical Direct
      Units Materials Conversion Costs
           

    Work in process, beginning 3,000    

    Started during May 7,000    


           

    Transferred out 7,500    

    Work in proces, ending 500    


           
    Cost of WIP beginning (in
    PHP)   30,000 45,000
    Costs added during the
    period (in PHP)   77,500 85,700

    Prepare the necessary journal entries under each of the following independent
    assumptions:
     Weighted average method is being used
    o Materials are added at the start of the process
    o Inspection point is at 100% of the process
     Weighted average method is being used
    o Materials are added at the end of the process
    o Inspection point is at 40% of the process
     Weighted average method is being used
    o Materials are added at 45% of the process
    o Inspection point is at 40% of the process
     FIFO method is being used
    o Materials are added at the start of the process
    o Inspection point is at 100% of the process
     FIFO method is being used
    o Materials are added at the end of the process
    o Inspection point is at 40% of the process
     FIFO method is being used
    o Materials are added at 45% of the process
    o Inspection point is at 40% of the process

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