Question 1

Segar Food Sauce Manufacturer produces the "Pedas" brand chilli sauce from one of its manufacturing processes. The following information of process inputs, outputs and work-inprocess relates to the month of September 2016:

kg
Opening work-in-process 21,700
Raw materials input 105,600
Output completed 92,400
Closing work-in-process 28,200

The opening and closing work-in-process are respectively 60 per cent and 50 per cent complete as to conversion costs.

Raw materials are added at the beginning of the manufacturing process. However, conversion costs are incurred evenly throughout the manufacturing process.

Losses occur at the beginning of the process and have a scrap value of $0.45 per kg.

The opening work-in-process included raw material costs of $56,420 and conversion costs of $30,597.

Costs incurred during the period were:

Raw material input $277,575
Conversion costs $229,026

The company uses FIFO method of process costing, assuming that the normal losses are 5 per cent of materials input.

Required:

(a) Using the four step approach:

(i) Compute the cost per equivalent unit for each product cost category for the month of September.

(ii) Calculate the cost of goods transferred to the finished goods store at the end of September.

(iii) Calculate the cost of abnormal spoilage in September.

(iv) Calculate the cost of ending work in process at the end of September.

(v) Calculate the unit cost of the finished goods transferred (rounded to 2 decimal places).

(b) Pass all the necessary journal entries.