Billingsley Company sells a single product manufactured in two departments, Cutting and Assembling. Units are started in Cutting and then are transferred to Assembling, where they are completed. Units are inspected at the 90% stage of completion in Cutting and at the end of the process in the Assembling. Materials are added before inspection in both departments. Units of product spoiled in Cutting have no salvage value; however, units found to be spoiled at the end of the Assembling Department process have a salvage value of $3 each. Good units are transferred from Assembling to Finished Goods Inventory at cost, and spoiled units are transferred to Spoiled Goods Inventory at their salvage value. The unrecoverable cost of spoilage in both departments is viewed by management as an internal failure cost and charged to Factory Overhead Control. Data for April's manufacturing operations are:
(1) Assuming the company uses a process cost system with average costing, prepare a cost of production report for each department for April.
(2) Assuming the company maintains a separate work in process account for the work in process inventory of each department, prepare general journal entries to record the transfer of cost out of each department during April.
This question was answered on: Jul 11, 2017
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