Kremel Co. produces a herbicide for lawns which also contains a weed killer. The product passes through four processes: combining, drying, mixing, and bagging. Two chemicals, X and Y, are added during the combining process. X is added at the beginning of the process and Y is added three quarters of the way through the combining process (75%). Labour and overhead are applied evenly throughout each process. After combining, the resulting product is sent to the drying department, where it is dried under heat lamps for 24 hours. After drying, the granulated product is sent to mixing where a fertiliser is mixed with the granulated herbicides. Finally, in bagging, the product is placed in 20kg bags. The following information relates to the combining process for the month of June.
· The work in process at June 1 consisted of 35,000 kg (76% complete as to conversion) with a cost of direct materials for X of $1,500 and Y of $7,500, direct labour $750 and overhead of $2,250.
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· Units completed and transferred out during June consisted of 745,000 kgs. Costs added during the month are as follows:
Direct Material X
Direct Material Y
· Work in process at June 30 consisted of 45,000kg (70% complete with respect to conversion costs).
The weighted average method is used to account for the costs of production.
Calculate the cost of production for completed goods and ending WIP in the combining department as at the June 30.
Your calculation should show:
i. physical flow of units (1.5 marks)
ii. equivalent units of production (3.5 marks)
iii. summarise costs and unit costs (rounded to 4 decimal places) (4.5 marks)
iv. apply costs to inventories (2.5 marks)