Question : 45) Silver Spoon Incorporated a manufacturer of kitchen utensils. It : 1217033

45) Silver Spoon Incorporated is a manufacturer of kitchen utensils. It produces all of its products in one department. The information for the current month is as follows:

Beginning work in process37,500 units

Units started55,000 units

Units completed75,000 units

Ending work in process14,500 units

Spoilage3,000 units

Beginning work-in-process direct materials$25,000

Beginning work-in-process conversion$ 10,000

Direct materials added during month$113,750

Direct manufacturing labor during month$40,020

Beginning work in process was 25% complete as to conversion. Direct materials are added at the beginning of the process. Factory overhead is applied at a rate equal to 37.5% of direct manufacturing labor. Ending work in process was 60% complete. All spoilage is normal and is detected at the end of the process.

Required:

Prepare a production cost worksheet if spoilage is recognized and the weighted-average method is used.

46) New Image Sports uses a process-costing system. For March, the company had the following activities:

Beginning work-in-process inventory (1/3 complete)6,000 units

Units placed in production24,000 units

Good units completed18,000 units

Ending work-in-process inventory10,000 units

Cost of beginning work in process$ 5,000

Direct material costs, current$18,000

Conversion costs, current$13,800

Direct materials are placed into production at the beginning of the process. All spoilage is normal and is detected at the end of the process. Ending WIP is 50% completed as to conversion.

Required:

Prepare a production cost worksheet using the FIFO method.

47) Weather Instruments assembles products from component parts. It has two departments that process all products. During January, the beginning work in process in the assembly department was half complete as to conversion and complete as to direct materials. The beginning inventory included $12,000 for materials and $4,000 for conversion costs. Overhead is applied at the rate of 50% of direct manufacturing labor costs. Ending work-in-process inventory in the assembly department was 40% complete. All spoilage is considered normal and is detected at the end of the process.

Beginning work in process in the finishing department was 75% complete as to conversion and ending work in process was 25% converted. Direct materials are added at the end of the process. Beginning inventories included $16,000 for transferred-in costs and $10,000 for direct manufacturing labor costs. Overhead in this department is equal to direct manufacturing labor costs. Additional information about the two departments follows:

AssemblyFinishing

Beginning work-in-process units20,00024,000

Units started this period40,000?

Units transferred this period50,00054,000

Ending work-in-process units8,00020,000

Material costs added$44,000$28,000

Direct manufacturing labor$16,000$24,000

Required:

Prepare a production cost worksheet using weighted-average for the assembly department and FIFO for the finishing department.

48) Harriet has been reviewing the accounting system for her company and she is very concerned about the accounting for spoilage. It appears that spoilage is accounted for only at the end of the processing cycle. While this concept is acceptable in general, Harriet believes that a better method can be found to properly account for the spoilage when it occurs. She believes that there must be something better than the weighted-average method of accounting for spoilage. She would like the company to use a method that provides closer tracking of the spoilage with the accounting for the spoilage.

Required:

Discuss the problems Harriet is having with the accounting system.

49) Spoilage can be a significant cost for many organizations. Discuss when spoilage might happen and how the costs of normal spoilage get allocated.