Kremel Co. produces a herbicide for lawns

Kremel Co. produces a herbicide for lawns

Subject: Business    / Accounting
Question

Question 1
Kremel Co. produces a herbicide for lawns which also contains a weed killer. The
product passes through four processes: combining, drying, mixing, and bagging. Two
chemicals, X and Y, are added during the combining process. X is added at the
beginning of the process and Y is added three quarters of the way through the
combining process (75%). Labour and overhead are applied evenly throughout each
process. After combining, the resulting product is sent to the drying department, where
it is dried under heat lamps for 24 hours. After drying, the granulated product is sent to
mixing where a fertiliser is mixed with the granulated herbicides. Finally, in bagging, the
product is placed in 20kg bags. The following information relates to the combining
process for the month of June. The work in process at June 1 consisted of 35,000 kg (76% complete as to
conversion) with a cost of direct materials for X of $1,500 and Y of $7,500, direct
labour $750 and overhead of $2,250.
Units completed and transferred out during June consisted of 745,000 kgs.
Costs added during the month are as follows:
Direct Material X $ 39,150 Direct Material Y 191,250 Direct Labour 19,225 Overhead 56,375 Work in process at June 30 consisted of 45,000kg (70% complete with respect to
conversion costs). The weighted average method is used to account for the costs of production.
Required:
Calculate the cost of production for completed goods and ending WIP in the combining
department as at the June 30.
Your calculation should show:
i
ii physical flow of units (1.5 marks)
equivalent units of production (3.5 marks) Cost/eu per
0.3156
0.097
iii
iv summarise costs and unit costs (rounded to 4 decimal places) (4.5 marks)
??Total costs to be accounted for………..
v 318000 239400$ $756000 vi
vii apply costs to inventories (2.5 marks) (Total: 12 marks)