Case 3 Tanner Company Manufactures Pharmaceutical Drugs At A Local Production Facility The Company Has Two Production 1 (74.66 KiB) Viewed 76 times
Case #3 Tanner Company. manufactures pharmaceutical drugs at a local production facility. The company has two production departments, stamping and packaging. The company uses the FIFO method of process costing. In November, the following data were recorded for the packaging department: Direct materials $0 Conversion Costs $34,020 Physical Transferred- Packaging Dept. units in Costs Work-in-process, November 1* 9,000 $22,050 Transferred-in during November 22,200 Good units completed and transferred out 18,000 Work-in-process, November 304 12,000 Total costs added during November $68,640 Degree of completion: direct materials, 0%; conversion costs, 70% ^ Degree of completion: direct materials, 100%; conversion costs, 25% $30,720 $82,680
Conversion costs are added evenly during the production process. Direct materials are added when production is 80% complete. The inspection point is at the end of production. Normal spoilage is 5% of all goods that pass inspection. Spoiled units are disposed of at zero net disposal value. Required: For November, summarize the total costs to account for, compute the cost per equivalent unit for transferred-in, direct materials, and conversion costs, and assign costs to units completed and transferred out (including normal spoilage), to abnormal spoilage, and to units in ending work-in-process.
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