FruitQueen (FQ) produces canned fruits. One of its most popular
products is canned longans. The fruits are delivered weekly from
Thailand and processed at the factory.

The following information relates to production of canned
longans for the month of July 2016.

Work in process, 1 July 2016* —– 5,000 units

Direct material fruit only ————–$3,000

Direct material other costs ————$600

Conversion costs ———————–$2,500

Costs incurred during the month

Direct material fruit only ————–$62,500

Direct material other costs ————$12,100

Conversion costs ———————–$102,497

Total number of units started in July
———————110,000 units

Work in process, 31 July 2016**
—————————-3,500 units

Total number of units transferred out (completed) ——110,000
units

* All direct material 100% complete; conversion 50% complete

** All direct material 100% complete; conversion 40%
complete

All direct material is added at the start of the production
process and conversion costs are incurred evenly throughout the
production process. Products are inspected at the end

of the production process and any spoilage is considered as
normal spoilage by FQ.

Required:

(a) Using weighted-average process costing, prepare a production
cost report for July 2016 showing (i) costs of completed units; and
(ii) balance of work in process

inventory at 31 July 2016. (Clearly show the cost per equivalent
unit to the nearest cent for each cost category.)

(b) Based on your answers from (a), write journal entries to
describe (i) the manufacturing costs incurred in July; and (ii) the
transfer of completed units at

the end of July 2016. (Narrations are not required.)

(c) If all spoiled units are considered as abnormal loss
instead, what would be the impact on the FQ’s reported profit for
July? Support your conclusions with

relevant computations.