Chandler Industries has two departments. Department 1 uses FIFO costing and Department 2 uses weighted average. Units are introduced into the process in Department 1 (this is the only material added in Department 1). Spoilage occurs continuously through the department and normal spoilage should not exceed 10 percent of the units started. Department 2 adds material (packaging) at the 75 percent completion point; this material does not cause an increase in the number of units being processed. A quality control inspection takes place when the goods are 80 percent complete. Spoilage should not exceed 5 percent of the units transferred in from Department 1. The following production cost data are applicable for operations for August of the current year:

Department 1 Production Data

Beginning inventory (65% complete) 1,000

Units started 25,000

Units completed 22,000

Units in ending inventory (40% complete) 2,800

Department 1 Cost Data

Beginning inventory:

Material $ 1,550

Conversion 2,300 $ 3,850

Current period:

Material $38,080

Conversion 78,645 116,725

Total costs to account for $120,575

Department 2 Production Data

Beginning inventory (90% complete) 8,000

Units transferred in 22,000

Units completed 24,000

Units in ending inventory (20% complete) 4,500

Department 2 Cost Data

Beginning inventory:

Transferred in $40,800

Material 24,000

Conversion 4,320 $ 69,120*

Current period:

Transferred in $113,700

Material 53,775

Conversion 11,079 178,554

Total costs to account for $247,674

*This may not be the same amount determined for Department 1;ignore any difference and use this figure. Required: a. Compute the equallent units of production in e ach department. b. Determine the cost per equivalent urit in each department and compute the cost transferred out, the cost in ending inventory, and the cost of spoilage ( if necessary).

Question

Chandler Industries has two departments. Department 1 uses FIFO costing and Department 2 uses weighted average.
Units are introduced into the process in Department 1 (this is the only material added in Department 1). Spoilage occurs continuously through the department and normal spoilage should not exceed 10 percent of the units started.
Department 2 adds material (packaging) at the 75 percent completion point; this material does not cause an increase in the number of units being processed. A quality control inspection takes place when the goods are 80 percent complete. Spoilage should not exceed 5 percent of the units transferred in from Department 1.
The following production cost data are applicable for operations for August of the current year:

Department 1 Production Data
Beginning inventory (65% complete)	1,000
Units started	25,000
Units completed	22,000
Units in ending inventory (40% complete)	2,800
Department 1 Cost Data
Beginning inventory:
Material	$ 1,550
Conversion	2,300	$ 3,850
Current period:
Material	$38,080
Conversion	78,645	116,725
Total costs to account for		$120,575
Department 2 Production Data
Beginning inventory (90% complete)	8,000
Units transferred in	22,000
Units completed	24,000
Units in ending inventory (20% complete)	4,500
Department 2 Cost Data
Beginning inventory:
Transferred in	$40,800
Material	24,000
Conversion	4,320	$ 69,120*
Current period:
Transferred in	$113,700
Material	53,775
Conversion	11,079	178,554
Total costs to account for		$247,674

*This may not be the same amount determined for Department 1;ignore any difference and use this figure. Required: a. Compute the equallent units of production in e ach department. b. Determine the cost per equivalent urit in each department and compute the cost transferred out, the cost in ending inventory, and the cost of spoilage ( if necessary).

Quizplus · Accepted Answer

The Answer of Chandler Industries has two departments. Department 1 uses FIFO costing and Department 2 uses weighted average. Units are introduced into the process in Department 1 (this is the only material added in Department 1). Spoilage occurs continuously through the department and normal spoilage should not exceed 10 percent of the units started. Department 2 adds material (packaging) at the 75 percent completion point; this material does not cause an increase in the number of units being processed. A quality control inspection takes place when the goods are 80 percent complete. Spoilage should not exceed 5 percent of the units transferred in from Department 1. The following production cost data are applicable for operations for August of the current year:

Department 1 Production Data
Beginning inventory (65% complete)	1,000
Units started	25,000
Units completed	22,000
Units in ending inventory (40% complete)	2,800
Department 1 Cost Data
Beginning inventory:
Material	$ 1,550
Conversion	2,300	$ 3,850
Current period:
Material	$38,080
Conversion	78,645	116,725
Total costs to account for		$120,575
Department 2 Production Data
Beginning inventory (90% complete)	8,000
Units transferred in	22,000
Units completed	24,000
Units in ending inventory (20% complete)	4,500
Department 2 Cost Data
Beginning inventory:
Transferred in	$40,800
Material	24,000
Conversion	4,320	$ 69,120*
Current period:
Transferred in	$113,700
Material	53,775
Conversion	11,079	178,554
Total costs to account for		$247,674

*This may not be the same amount determined for Department 1;ignore any difference and use this figure. Required: a. Compute the equallent units of production in e ach department. b. Determine the cost per equivalent urit in each department and compute the cost transferred out, the cost in ending inventory, and the cost of spoilage ( if necessary).

Chandler Industries Has Two Departments