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Ottawa Manufacturing is a furniture manufacturer with 2 departments: Moulding and Finishing. The company uses the...

Ottawa Manufacturing is a furniture manufacturer with 2 departments: Moulding and Finishing. The company uses the FIFO Method (FIFO) of process costing. In august, the following data were recorded for the Finishing department:

Unit of beginning work-in-process inventory

12,500

Percent completion of beginning work-in-process units

25%

Cost of direct materials in beginning work-in-process

0

Units started

97,500

Units completed

75,000

Units in ending inventory

25,000

Percentage completion of ending work-in-process units

95%

Spoiled units

10,000

Total costs period

Direct materials

$819,000

Direct manufacturing labour

$794,000

Manufacturing overhead

$770,000

Work-in-process beginning

    Transferred-in-costs

$103,625

    Conversion costs

$52,500

Costs of units transferred in during current period

$809,375

Conversion costs are added evenly during the process. Direct materials are added when production is 70% complete. The inspection point is at the 80% stage of production. Normal spoilage is 8% of all goods units that pass the inspection. Spoiled units are disposed of at $10 per unit.

Required

  1. Prepare the production report of the Finishing department for the month of August using the FIFO METHOD.
  2. Prepare the accounting entries to record for the month of August:

The Cost of Goods Manufactured (COGM) of the Finishing department into the Finished Goods (FG) inventory.

And

The losses of the Finishing department.

Business   Accounting   
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Answer #1

The first is the preparation of quantity of schedule

Units at the beginning 12500 Units completed and transfered
Units started this period 97500 Units from Beg.WIP (A) 12500
Total Units 110000 Units started and completed (97500-25000) (B) 72500
Total units completed and transfered (A+B) 85000
Units in End WIP 25000
Total Units 110000

The equivalent production for the unit will be

Units from the beg. WIP [12500*(100%-25% complete) 9375
Units started and completed 72500
units in ending WIP (25000*95%) 23750

Total Equivalent units wiil be (9375+72500+23750) =105625

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