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	80,000	70%	40%
Started into production	392,500
Completed and transferred out	382,500
Work in process, ending	90,000	75%	25%

	Materials		Conversion
Work in process, beginning	$	31,500	$	11,300
Cost added during June	$	337,500	$	239,800

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

		Units
Reconciliation of Units
A	Opening WIP	80,000
B	Introduced	392,500
C=A+B	TOTAL	472,500
D	Transferred	382,500
E=C-D	Closing WIP	90,000

Requirement 1

Statement of Equivalent Units
		Material		Conversion Cost
	Units	Complete %	Equivalent units	Complete %	Equivalent units
Transferred	382,500	100%	382,500	100%	382,500
Closing WIP	90,000	75%	67,500	25%	22,500
Total	472,500	Total	450,000	Total	405,000

	Material	Conversion
Equivalent Units of Production	450,000	405,000

Requirement 2

Cost per Equivalent Units
COST	Material	Conversion Cost	TOTAL
Beginning WIP Inventory Cost	$              31,500	$                11,300	$           42,800
Cost incurred during period	$            337,500	$              239,800	$        577,300
Total Cost to be accounted for	$            369,000	$              251,100	$        620,100
Total Equivalent Units	450,000	405,000
Cost per Equivalent Units	$   0.82	$ 0.62

	Material	Conversion
Cost per equivalent Unit	$   0.82	$ 0.62

Requirement 3

Statement of cost
Cost	Equivalent Cost/unit	Ending WIP
		Units	Cost Allocated
Material	$     0.82	67,500	$                55,350
Conversion Cost	$     0.62	22,500	$                13,950
TOTAL	$     620,100	TOTAL	$                69,300

	Material	Conversion	Total
Cost of ending Inventory	$ 55,350	$   13,950	$    69,300

Requirement 4

Statement of cost
Cost	Equivalent Cost/unit	Transferred
		Units	Cost Allocated
Material	$     0.82	382,500	$                 313,650
Conversion Cost	$     0.62	382,500	$                 237,150
TOTAL	$     620,100	TOTAL	$                 550,800

	Material	Conversion	Total
Cost of Units Completed and Transferred out	$313,650	$ 237,150	$   550,800

Requirement 5

Reconciliation
Cost to be accounted for
Beginning Work In Progress:
Material	$         31,500.00
Conversion Cost	$         11,300.00	$ 42,800.00
Cost incurred during period:
Material	$       337,500.00
Conversion Cost	$       239,800.00	$ 577,300.00
Total Cost to be accounted for				$ 620,100.00
Cost accounted for
Cost of Units transferred	Equivalent Units	Cost per Equivalent Units	Cost accounted for
Material	382,500	$     0.82	$        313,650.00
Conversion Cost	382,500	$   0.62	$        237,150.00
				$ 550,800.00
Cost of ending WIP	Equivalent Units	Cost per Equivalent Units	Cost accounted for
Material	67,500	$ 0.82	$          55,350.00
Conversion Cost	22,500	$ 0.62	$          13,950.00
				$     69,300.00
Total Cost accounted for				$ 620,100.00