Question

Sunspot Beverages, Ltd., of Fiji makes blended tropical fruit drinks in two stages. Fruit juices are extracted from fresh fruits and then blended in the Blending Department. The blended juices are then bottled and packed for shipping in the Bottling Department. The following information pertains to the operations of the Blending Department for June. Percent Completed Units Materials Conversion Work in process, beginning 20,000 100% 75% Started into production 180,000 Completed and transferred out 160,000 Work in process, ending 40,000 100% 25% Materials Conversion Work in process, beginning $ 25,200 $ 24,800 Cost added during June $ 334,800 $ 238,700 Required: Assume that the company uses the weighted-average method. 1. Determine the equivalent units for June for the Blending Department. 2. Compute the costs per equivalent unit for the Blending Department. (Round your answers to 2 decimal places.) 3. Determine the total cost of ending work in process inventory and the total cost of units transferred to the Bottling Department. 4. Prepare a cost reconciliation report for the Blending Department for June.

Answer 1

• All working forms part of the answer
• Requirement 1

EUP - Weighted Average Method	Units	% Material	EUP Materials	% Conversion	EUP - Conversion
Units TRANSFERRED	160,000	100%	160,000	100%	160,000
Units of ENDING WIP	40,000	100%	40,000	25%	10,000
Equivalent Units of Production			200,000		170,000

• Requirement 2

COST per EUP			Material		Conversion
Cost of Beginning WIP			$          25,200.00		$                                  24,800.00
Cost incurred during the period			$        334,800.00		$                                238,700.00
Total Costs		Costs	$        360,000.00	Costs	$                                263,500.00
Equivalent units of production		EUP	200,000	EUP	170,000
Cost per EUP			$              1.80		$                                      1.55

• Requirement 3

Cost of ending WIP	EUP	Cost per EUP	Total Cost
- Direct Materials	40,000	$               1.80	$          72,000.00
- Conversion	10,000	$               1.55	$          15,500.00
Total cost of ending WIP				$              87,500.00

Cost of Units Transferred Out	EUP	Cost per EUP	Total Cost
- Direct Materials	160,000	$               1.80	$        288,000.00
- Conversion	160,000	$               1.55	$        248,000.00
Total Cost transferred Out				$            536,000.00

• Requirement 4

Cost Reconciliations

	TOTAL	Material	Conversion Cost
Flow of Costs:
Costs to be accounted for:
Cost of Beginning WIP	$    50,000.00	$        25,200.00	$        24,800.00
Current Period cost	$ 573,500.00	$      334,800.00	$      238,700.00
Total Cost to be accounted for (A)	$ 623,500.00	$      360,000.00	$      263,500.00
Costs accounted for:
Cost assigned to units transferred out	$ 536,000.00	$      288,000.00	$      248,000.00
Cost of ending WIP Inventory	$    87,500.00	$        72,000.00	$        15,500.00
Total Costs accounted for (B)	$ 623,500.00	$      360,000.00	$      263,500.00
A = B = Cost Reconciled

Summary of Reconciliation

Costs to be accounted for:
Cost of Beginning WIP Inventory	$           50,000.00
Cost added to production during the period	$         573,500.00
Total Cost to be accounted for	$         623,500.00
Costs accounted for as follows:
Cost of units transferred out	$         536,000.00	[Requirement 3]
Cost of Ending WIP Inventory	$           87,500.00	[Requirement 3]
Total Cost accounted for	$         623,500.00