Question

Weighted Average Method, Separate Materials Cost Janbo Company produces a variety of stationery products. One product, sealing wax sticks, passes through two processes: blending and molding. The weighted average method is used to account for the costs of production. After blending, the resulting product is sent to the molding department, where it is poured into molds and cooled. The following information relates to the blending process for August: a. Work in Process on August 1, had 30,000 pounds, 20% complete. Costs associated with partially completed units were: Materials $220,000 Direct labor 30,000 Overhead applied 20,000 b. Work in Process on August 31, had 50,000 pounds, 40% complete. c. Units completed and transferred out totaled 480,000 pounds. Costs added during the month were (all inputs are added uniformly): Materials $5,800,000 Direct labor 4,250,000 Overhead applied 1,292,500 Required: 1a. Prepare a physical flow schedule. Janbo Company Physical Flow Schedule Units to account for: Units in beginning work in process Units started Total units to account for Units accounted for: Units completed From ending work in process Total units accounted for 1b. Prepare an equivalent unit schedule. Janbo Company Schedule of equivalent units Weighted Average Method Units completed Units in ending work in process Total equivalent units 2. Calculate the unit cost. Round unit cost value to three decimal places. $ 3. Compute the cost of EWIP and the cost of goods transferred out. Ending work in process $ Goods transferred out $ 4. Prepare a cost reconciliation. Janbo Company Cost Reconciliation Costs to account for: Beginning WIP $ August costs Total to account for $ Costs accounted for: Transferred out $ Ending WIP Total costs accounted for $ 5. Suppose that the materials added uniformly in blending are paraffin and pigment and that the manager of the company wants to know how much each of these materials costs per equivalent unit produced. The costs of the materials in BWIP are as follows: Paraffin $120,000 Pigment 100,000 The costs of the materials added during the month are also given: Paraffin $3,250,000 Pigment 2,550,000 Prepare an equivalent unit schedule with cost categories for each material. Paraffin Pigment Units completed Units in ending WIP Total equivalent units Unit cost computation: Costs in BWIP $ $ Costs added Total costs $ $ Calculate the cost per unit for each type of material. Round your answers to the nearest cent. Unit paraffin cost $per unit Unit pigment cost $per unit

Answer 1

Requirement 1a: Prepare physical flow schedule as follows

Particulars	Units
Units to account for
Beginning work in process	30,000
Units started (480,000 + 50,000 − 30,000)	500,000
Total units to account for	530,000
Units accounted for
Units completed and transferred	480,000
Ending work in process	50,000
Total units accounted for	530,000

Requirement 1b. Prepare equivalent unit schedule as follows

Particulars	Units	Percentage Completed	Total
Units completed and transferred	480,000	100%	480,000
Ending work in process	50,000	40%	20,000
Total equivalent units			500,000

Requirement 2: Calculate equivalent cost per unit as follows

Particulars	Amount	Amount
Beginning work in process
Materials	$220,000
Direct labor	$30,000
Overhead applied	$20,000	$270,000
Cost added during the month
Materials	$5,800,000
Direct labor	$4,250,000
Overhead applied	$1,292,500	$11,342,500
Total cost		$11,612,500
÷    Total equivalent units		500,000
Equivalent cost per unit		$23.225

Requirement 3: Compute the cost of ending WIP and completed units as follows

Particulars	Units	Cost per unit	Amount
Ending work in process	20,000	$23.225	$464,500
Units completed and transferred	480,000	$23.225	$11,148,000

Requirement 4: Prepare cost reconciliation statement as follows

Costs to account for:	Amount
Beginning work in process:
Materials	$220,000
Direct labor	$30,000
Overhead applies	$20,000
Costs added during the month
Materials	$5,800,000
Direct labor	$4,250,000
Overhead applies	$1,292,500
Total costs to account for	$11,612,500
Costs accounted for
Ending work in process	$464,500
Units completed and transferred	$11,148,000
Total costs accounted for	$11,612,500

Requirement 5: Prepare equivalent unit schedule as follows:

Particulars	P1	P2
Equivalent units
Completed units	480,000	480,000
Work in process- Ending	20,000	20,000
Total equivalent units (a)	500,000	500,000
Calculation of unit cost
Beginning work in process	$120,000	$100,000
Costs added during the month	$3,250,000	$2,550,000
Total costs (b)	$3,370,000	$2,650,000
Cost of each unit (b) ÷ (a)	$6.74	$5.30