FLORIDA CORPORATION   ……

FLORIDA CORPORATION

……. manufactures shampoo in two departments, Mixing and Packing.  Once the shampoo mixture is completed in the Mixing Department, it is sent to the Packing department, where a machine fills and seals individual bottles, which are then passed to a machine that places the bottles in individual boxes.

In the Mixing department, materials are added at the beginning of the process.  In the Packing department, however, we have several different materials and, therefore, materials are added at different parts of the process.  (The percentage of completion amounts are given, so that you don’t have to figure out what materials are added where.)

The company uses the weighted-average process costing method for assignment of production costs.

The following information is related to production in the Mixing Department for February 2016:

Required:

For requirements 1 and 2, assume that all units produced were “good” units and met the company’s quality-control standards.  (In the both departments, units are inspected 75% of the way through the production process.)

In doing your computations, round ALL equivalent unit costs to 2 decimal places.

1. Prepare a production report for the Mixing Department

2. Prepare the journal entry to record the completion of units in the Mixing Department

3. SUPPOSE that the FIFO method was used for this department instead.  What would be the equivalent units and unit costs for materials and conversion?

4. Suppose that the units are inspected at the end of the mixing department before they are transferred to packing, and 10,000 of the units failed inspection and were removed from production at that point.  That is, suppose that 10,000 units were “spoilage” and only 635,000 were completed and transferred to packing.

1. How do you think we should handle this situation?  Any idea?  Would it matter whether the spoilage was normal or abnormal? What journal entry do you think we would make in each case?
2. What if, instead of the units being inspected at the END of the mixing, instead, the inspection point happened to be when they were 60% completed.  Would this change or answer at all?

Required:

For requirements 1 and 2, assume that all units produced were “good” units and met the company’s quality-control standards.  In doing your computations, round ALL equivalent unit costs to 2 decimal places AND use your rounded number in subsequent computations! 

1. Prepare a production report for the Packing Department.  (Remember – the units AND costs from the Mixing department during the period go to the Packing Department.)

2. Prepare the journal entry to record the completion of units in the Packing Department.