The Skate Board Company Uses a Process Cost System for Making

question 54

Essay

The Skate Board Company uses a process cost system for making skateboard wheels.Materials are added at the beginning of the process and conversion costs are uniformly incurred.At the beginning of September the work-in-process is 40 percent complete and at the end of the month it is 60 percent complete.Spoilage is detected at the end of the process.Other data for the month include:

Required:
a.Prepare a production cost worksheet assuming that spoilage is recognized and the FIFO method is used.
b.Prepare journal entries to record transferring out of cost from the work-in-process accounts.

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Analyze the legal effect of an illusory promise and gratuitous promises in contract law.