Fen Furnishings produces brass handles for the furniture industry in a four-stage process –Mixing, Moulding, Polishing and Packaging. Costs incurred in the Polishing Department during January are...

  Fen Furnishings produces brass handles for the furniture industry in a four-stage process –Mixing, Moulding,
Polishing and Packaging. Costs incurred in the Polishing Department during January are summarized as follows:
WIP - Polishing Process A/C
January 1 Bal.
Transfer from Moulding
Direct Materials Added
Direct Labour
Manufacturing Overhead
20,000
$ 0
1,310,000
391,600
638,000
307,400
Normal losses are estimated to be 2½% of input during the period. Inspection takes place during the processing
operation, at which point damaged handles are separated from good handles and sold as scrap to local furniture
manufacturers at $85 each.
At inspection, 2,000 handles were rejected as scrap. These units had reached the following degree of completion:
Transfer from Moulding 100%
Direct material added 40%
Conversion costs 20%
Work-in-progress at the end of January was 4,000 handles and had reached the following degree of completion:
Transfer from Moulding 100%
Direct material added 80%
Conversion costs 50%
Direct materials added and conversion costs are incurred uniformly throughout the process.

Prepare the journal entries for the:
 assignment of direct materials, direct labour incurred and the manufacturing overhead applied to
the Polishing Process
 cost of the units completed and transferred out to the Packaging Process.
(e) Given that 30% of the unexpected losses were as a result of pilferage, calculate Fen Furnishings true loss associated with the Polishing Process.