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(solution) Sky Brewery is a craft brewery that produces a special light beer


Sky Brewery is a craft brewery that produces a special light beer for ladies. The beer is processed sequentially in two departments (Department X and Department Y) before the final products are transferred to the finished goods store.


On 1 February 2016, the work in process in Department Y consisted of 12,000 litres which were 80% completed. During the month, a total of 160,500 litres were started and 148,500 litres were completed and transferred out. On 29 February 2016, 15,000 litres remained uncompleted. The ending work in process was 60% complete.
Sky Brewery is a craft brewery that produces a special light beer for ladies. The beer is

 

processed sequentially in two departments (Department X and Department Y) before the

 

final products are transferred to the finished goods store.

 

On 1 February 2016, the work in process in Department Y consisted of 12,000 litres

 

which were 80% completed. During the month, a total of 160,500 litres were started and

 

148,500 litres were completed and transferred out. On 29 February 2016, 15,000 litres

 

remained uncompleted. The ending work in process was 60% complete.

 

The cost information for Department Y for the month of February:

 

$

 

Work in process, 1 February 2016

 

Cost transferred in from Department X during February

 

Manufacturing costs added in Department Y during February

 

Direct materials

 

321,000

 

Conversion costs

 

541,275

 

Total manufacturing costs, Department Y $

 

80,000

 

642,000

 

862,275

 

1,584,275 In Department Y, direct material and transferred-in costs are added at the beginning of the

 

manufacturing process. However, conversion costs are incurred evenly throughout the

 

manufacturing process.

 

Inspection at Department Y takes place when the products are 75% complete.

 

Normal spoilage averages at 5% of the good units produced.

 

The firm uses the FIFO method of process costing.

 

Required:

 

(a)

 

(i) Compute the cost per equivalent unit for each product cost category in

 

Department Y for the month of February. (ii) Calculate the cost of goods transferred to the finished goods store at the end

 

of February from Department Y. (iii) Calculate the cost of abnormal spoilage for Department Y in February. (iv) Calculate the cost of ending work in process in Department Y at the end of

 

February. (b) Pass all the necessary journal entries.

 


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