Average Costing Method; Normal Spoliage During Production. Bollinger Band Paper Products manufactures a high-quality paper box. The Box Department applies two separate operations—cutting and folding. The paper is first cut and trimmed to the dimensions of a box form by one machine group. One square foot of paper is equivalent to four box forms. The trimmings from this process have no scrap value. Box forms are then creased and folded (i.e., completed) by a second machine group. Any partially processed boxes in the Box Department are cut box forms that are ready for creasing and folding. These partly processed boxes are considered 50% complete as to labor and factory overhead. The Materials Department maintains an inventory of paper in sufficient quantities to permit continuous processing, and transfers to the Box Department are made as needed. Immediately after folding, all satisfactory boxes are transferred to the Finished Goods Department.
During June, 19—, the Materials Department purchased 1,210,000 square feet of unprocessed paper for $244,000. Conversion costs for June were $226,000. A quantity equal to 30,000 boxes was spoiled during paper cutting, and 70,000 boxes were spoiled during folding. All spoilage has a zero salvage value, is considered normal, and cannot be reprocessed. All spoilage loss is allocated between the completed units and partially processed boxes. Bollinger Band applies the weighted average costing method to all inventories.
Required: For the month of June, 19—, prepare:
(1) A report of cost of paper used for the Materials Department.
(2) A schedule showing the physical flow of units (including beginning and ending inventories) in the Materials Department, in the Box Department, and in the Finished Goods Department.
(3) A schedule showing the computation of equivalent units produced in June for materials and conversion costs in the Box Department.
(4) A schedule of the computation of unit costs for the Box Department.
(5) A report of inventory cost and cost of completed units for the Box Department.
(6) A schedule showing the computation of unit costs for the Finished Goods Department.
(7) A report of inventory cost and cost of units sold for the Finished Goods Department.