Question

Sunspot Beverages, Ltd., of Fiji uses the weighted-average method in its process costing system. It 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	62,000	70%	40%
Started into production	316,000
Completed and transferred out	306,000
Work in process, ending	72,000	75%	25%

	Materials		Conversion
Work in process, beginning	$	22,100	$	7,600
Cost added during June	$	237,100	$	160,880

Required:

1. Calculate the Blending Department's equivalent units of production for materials and conversion in June.

2. Calculate the Blending Department's cost per equivalent unit for materials and conversion in June.

3. Calculate the Blending Department's cost of ending work in process inventory for materials, conversion, and in total for June.

4. Calculate the Blending Department's cost of units transferred out to the Bottling Department for materials, conversion, and in total for June.

5. Prepare a cost reconciliation report for the Blending Department for June.

Answer 1

Solution

	Material	Conversion
Equivalent Units of Production	360,000	324,000

.

	Material	Conversion
Cost per equivalent Unit	$ 0.72	$ 0.52

.

	Material	Conversion	Total
Ending Inventory	$ 38,880	$ 9,360	$ 48,240

.

	Material	Conversion	Total
Units Completed and transferred	$ 220,320	$ 159,120	$ 379,440

.

Cost Reconciliation
Costs to be accounted for:
Beginning Wip cost	$ 29,700
Cost incurred during period	$ 397,980
Total cost to be accounted for	$ 427,680
Costs accounted for as follows:
Cost of Units Transferred Out	$ 379,440
Cost of Ending Wip	$ 48,240
Total cost accounted for	$ 427,680

Working

Statement of Equivalent Units(Weighted average)
				Material		Conversion
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	306,000			100%	306,000	100%	306,000
Ending WIP	72,000			75%	54,000	25%	18,000
Total	378,000			Total	360,000	Total	324,000

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion	TOTAL
Beginning WIP Inventory Cost (A)		$ 22,100	$ 7,600	$ 29,700
Cost incurred during period (B)		$ 237,100	$ 160,880	$ 397,980
Total Cost to be accounted for (C=A+B)		$ 259,200	$ 168,480	$ 427,680
Total Equivalent Units(D)		360,000	324,000
Cost per Equivalent Units (E=C/D)		$                   0.72	$                     0.52	$                        1.24

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$ 0.72	54,000	$          38,880.00	306,000	$        220,320.00
Conversion	$ 0.52	18,000	$             9,360.00	306,000	$        159,120.00
TOTAL	$ 427,680	TOTAL	$ 48,240	TOTAL	$ 379,440