Plasmax Ltd. manufactures a single product which passes through 2 departments, Cutting and Moulding.
All work is commenced in Cutting, from which all output is immediately transferred to Moulding where additional materials are added only at 1 point, that is, when processing is 50% complete.
In the Moulding department, conversion costs are incurred uniformly throughout the process. Overhead is allocated on the basis of 150% of direct labour cost.
Work in process, 1 Jul (18,000 units, 60% complete), cost of which includes :
Department - Cutting costs $338,400
Department - Moulding direct materials $230,400
Department - Moulding direct labour $75,600
Department - Moulding overheads $?
During the month of Jul, 120,000 units were completed and transferred to finished goods inventory. Units transferred in from Cutting in Jul were charged at $19.00 per unit. Moulding department's costs in Jul were :
Materials added $1,377,000
Direct labour $867,588
Overheads $?
At the end of the month, 20,000 units were still in process in Moulding. These were estimated to be 45% complete.
Required :
(a) Prepare the Moulding Department production cost report for the month of Jul 2010 using (round up to 2 decimal place) :
(i) Weighted Average method
(ii) FIFO method
(b) Assume that the conversion costs of Moulding Department in the current month increased by 20%. What is the new conversion cost per equivalent unit and costs of units completed and transferred out using (i) Weighted Average and (ii) FIFO method?