Saturn Olive Oil Co is a subsidiary of Mercury Australasia based in Cobram Victoria and produces a range of olive oil products. Olives are purchased from sub-contract olive plantation farmers in an around Cobram. The olives are cold pressed and the oil processed and filtered before bottling and sold to a variety of wholesale and retail vendors under several different brand names.
The following data relates to the production of Saturn Olive Oil during the month of February 2017. At the start of February there was 75,000 litres of product in process. All materials are added at the start of the process and conversion costs are incurred evenly throughout whole of the process.
| Work-in-Process: February 1, 2017 | 75,000 Litres | |
| Stage of completion | Value | |
| Materials | 100% | $50,000 |
| Conversion | 85% | $282,500 |
| Work-in-Process: February 28, 2017 | 110,000 Litres | |
| Stage of completion | ||
| Materials | 100% | |
| Conversion | 20% | |
During February 2,250,000 litres were commenced and costs incurred during the month were $1,525,000 for Direct Materials and $9,999,500 on Conversion.
Required:
(i) Using the Weighted Average Cost Method determine the cost value of closing WIP and the cost value of goods transferred out to Finished Goods during the period.
(5 marks)
(ii) Using the First In First Out (FIFO) method determine the cost value of closing WIP and the cost value of goods transferred out to Finished Goods during the period.
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