Weather Instruments Assembles Products from Component Parts

question 104

Essay

Weather Instruments assembles products from component parts. It has two departments that process all products. During January the beginning work in process in the assembly department was half completed as to conversion and complete as to direct materials. The beginning inventory included $12,000 for materials and $4,000 for conversion costs. Overhead is applied at the rate of 50 percent of direct manufacturing labour costs. Ending work in process inventory in the assembly department was 40 percent complete. All spoilage is considered normal and is detected at the end of the process. Beginning work in process in the finishing department was 75 percent complete as to conversion and ending work in process was 25 percent converted. Direct materials are added at the end of the process. Beginning inventories included $16,000 for transferred-in costs and $10,000 for conversion costs. Overhead in this department is equal to direct manufacturing labour costs. Additional information about the two departments follows:
Required:
Prepare a production cost worksheet using weighted-average for the assembly department and FIFO for the finishing department.

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Definitions:

Times Interest Earned

A financial ratio that measures a company's ability to meet its interest payments on outstanding debt.

Quick Ratio

A measure of a company's ability to meet its short-term obligations with its most liquid assets, without relying on inventory.

Current Liabilities

Obligations or debts that a company is expected to pay within a year.

Assets

Resources owned or controlled by a business, viewed as providing future economic benefits.