General Fabricators Assembles Its Product in Several Departments

question 35

Essay

General Fabricators assembles its product in several departments.It has two departments that process all units.During October, the beginning work in process in the cutting department was half completed as to conversion, and complete as to direct materials.The beginning inventory included $12,000 for materials and $3,000 for conversion costs.Ending work-in-process inventory in the cutting department was 40% complete.Direct materials are added at the beginning of the process.Beginning work in process in the finishing department was 75% complete as to conversion.Direct materials are added at the end of the process.Beginning inventories included $16,000 for transferred-in costs and $20,000 for conversion costs.Ending inventory was 25% complete.Additional information about the two departments follows:
Required:
Prepare a production cost worksheet using weighted-average for the cutting department and FIFO for the finishing department.

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Definitions:

Bill of Material

A comprehensive list detailing all the components, materials, and parts required to manufacture a product, including quantities and specifications.

Inventory

An accounting term referring to the goods and materials held by a business for the purpose of resale or production.

Lot-For-Lot

An ordering system where the exact quantity needed for production is ordered, minimizing inventory holding costs.

EOQ Lot-Sizing

An inventory management technique that determines the optimal order size to minimize the sum of ordering, holding, and stockout costs.