Valentine Accessories Plus produces brass handles for thefurniture industry in a four-stage process –Mixing, Moulding,Polishing and Packaging. Costs incurred in the Polishing Departmentduring January are summarized as follows: WIP - Polishing ProcessA/C January 1 Bal. Transfer from Moulding Direct Materials AddedDirect Labour Manufacturing Overhead 20,000 $ 0 1,310,000 391,600638,000 307,400 Normal losses are estimated to be 2½% of inputduring the period. Inspection takes place during the processingoperation, at which point damaged handles are separated from goodhandles and sold as scrap to local furniture manufacturers at $85each. At inspection, 2,000 handles were rejected as scrap. Theseunits had reached the following degree of completion: Transfer fromMoulding 100% Direct material added 40% Conversion costs 20%Work-in-progress at the end of January was 4,000 handles and hadreached the following degree of completion: Transfer from Moulding100% Direct material added 80% Conversion costs 50% Directmaterials added and conversion costs are incurred uniformlythroughout the process. Required: (a) Compute the equivalent unitsand cost per equivalent units for direct materials (From Moulding& Direct materials added) and conversion costs. (b)Compute the: ? cost of the unexpected losses ? total cost of thehandles completed and transferred out of the Packaging Department ?cost of ending work in process inventory in the PolishingDepartment (c) Complete the Work in Process Inventory –Polishing Process T-account, clearly showing the ending balance. (d) Prepare the journal entries for the: ? assignment ofdirect materials, direct labour incurred and the manufacturingoverhead applied to the Polishing Process ? cost of the unitscompleted and transferred out to the Packaging Process(e) Given that 30% of the unexpected losses were as a result ofpilferage, calculate Valentine Accessories true loss for thePolishing Department.
