Tools & Moreuses three departments to produce plastic handles for screwdrivers. Forming the handles require mixing the raw materials, molding and drying. After the drying process, the screwdrivers are completed by assembling the handles and the shanks and packing for shipment. The following information relates to the molding process:
There was no opening WIP stock
5,000 kilos of material at $43.08 per kilo entered the process
Direct materials added
$92,000
Direct wages incurred
65,700
Production overhead
75,100
Normal loss is 4% of input
A quality control check was done at theendof the molding process and 350 handles were rejected as spoilage. Spoiled units, regardless of their degree of completion, are sold at $45.00 each, and it is company’s policy to credit the process account with the scrap value of the normal loss units.
Closing WIP was 800 units but these were incomplete, having reached the following percentages of completion for each of the elements of cost listed.
Input material
100%
Direct material added
75%
Conversion costs
50%
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