Question

51-301-01 Cost Accounting

Chapter 17 Process Costing

Fall Trimester 2018

Juiced! Bottling Company produces a low-calorie soft drink made from a mixture of domestic and exotic fruit juices. The total production operation requires two departments: Blending and Canning. All ingredients (materials) enter Blending at the beginning of the process and are mixed according to a specific recipe. Labor and overhead are incurred uniformly throughout the blending operations. The completed mixture is transferred into the Canning Department. In Canning, the mixture goes through a cooling process. Two-thirds of the way through the process, the cooled mixture then moves to a canning line where 12-oz cans (materials) are filled and sealed; conversion is even throughout. The Blending Department uses FIFO inventory flow and Canning uses Weighted Average. Production data for January 2018 are as follows:

                                                            Blending                                 Canning

Work in Process, Jan. 1:

   Units                                                60,000 oz.                               8,000 cans

   % Completion, conversion                     20%                                       50%

   Costs:

            Transferred In                             ---                                        $700,000

            Materials                                 $108,600                                 100,000

            Labor                                             1,280                                 100,000

            Overhead                                      8,960                                 300,000

            Total Costs                              $118,840                              $1,200,000

Units Started/Transferred In               504,000 oz.                             42,000 cans

Units Completed & Transferred         528,000 oz.                             44,000 cans

Current Period Costs:

            Transferred In                               ---                                      $212,500

            Materials                                 $433,440                                 285,000

            Labor                                           27,323                                     34,300

            Overhead                                176,965                                      33,725

            Total Costs                              $637,728                                 $565,525

Work in Process, Jan. 31:

   Units                                                36,000 oz                                6,000 cans

   % Completion, conversion                   60%                                         50%

   % Completion, materials                  100%                                           0%

Required:

Prepare the process costing worksheet for the Blending Department for January, using good format.

Prepare the process costing worksheet for the Canning Department for January, using good format.

Answer 1

Step for solution
Step 1	Equivalent Units of production = Physical units multiplied by % of competition
Step 2	Calculate total cost to be accounted for
Step 3	Cost per Equivalent Unit =Cost incurred during Month / Equivalent Units of production
Step 4	Cost assigned to units transferred out = Cost in beginning WIP + Cost incurred for complete beginning WIP + Cost of units in Started and completed
Step 5	Cost assigned to units ending work in progress = equivalent units in ending WIP inventory * Cost per Equivalent Unit
Conversion cost = labor cost plus overhead
For direct material 100% unit completed in previous period. It means remaining 0% completed in this month.
For conversion cost 20% unit completed in previous period. It means remaining 80% completed in this month.

Bottling Company
Blending Department production Report
First in First out (FIFO) Method
Month ended January 31, 2018
Summary of Physical units
Units in beginning WIP inventory			60000
Units started during month			504000
Total unit to be accounted for			564000
Units completed and transferred out			528000
Units in ending WIP inventory			36000
Total unit accounted for			564000
Equivalent Units of production
Particulars	Physical units	Direct material		Conversion Cost
		%	Units	%	Units
Units in beginning WIP inventory	60000	0%	0	80%	48000
Units in Started and completed (528000-60000)	468000	100%	468000	100%	468000
Units in ending WIP inventory	36000	100%	36000	60%	21600
Equivalent Units of production			504000		537600
Summary of cost to be accounted
	Direct material	Conversion Cost	Total
Cost in beginning WIP	108600	10240	118840
Cost incurred during Month (Add)	433440	204288	637728
Total cost to be accounted for	542040	214528	756568
Cost per Equivalent Unit
Cost incurred during Month	433440	204288
Equivalent Units of production	504000	537600
Cost per Equivalent Unit	0.86	0.38	1.24
Assign costs to units transferred out and units in ending WIP inventory
Cost assigned to units transferred out
Direct material	108600
Conversion Cost	10240
Cost in beginning WIP		118840
Direct material (0*0.86)	0
Conversion Cost (48000*0.38)	18240
Cost incurred for complete beginning WIP		18240
Direct material (468000*0.86)	402480
Conversion Cost (468000*0.38)	177840
Cost of units in Started and completed		580320
Cost assigned to units transferred out		717400
Cost assigned to units ending work in progress
Direct material (36000*0.86)	30960
Conversion Cost (21600*0.38)	8208
Cost assigned to units ending work in progress		39168
Total cost assigned		756568

Step for solution
Step 1	Equivalent Units of production = Physical units multiplied by % of competition
Step 2	Calculate total cost to be accounted for
Step 3	Cost per Equivalent Unit = total cost to be accounted for / Equivalent Units of production
Step 4	Cost assigned to units transferred out = units completed and transferred out * Cost per Equivalent Unit
Step 5	Cost assigned to units ending work in progress = equivalent units in ending WIP inventory * Cost per Equivalent Unit

Bottling Company
Canning Department production Report
Weighted average Method
Month ended January 31, 2018
Summary of Physical units
Units in beginning WIP inventory			8000
Units started during month			42000
Total unit to be accounted for			50000
Units completed and transferred out			44000
Units in ending WIP inventory			6000
Total unit accounted for			50000
Equivalent Units of production
Particulars	Physical units	Direct material		Transferred in		Conversion cost
		%	Units	%	Units	%	Units
Units in beginning WIP inventory	8000	100%	8000	100%	8000	100%	8000
Units in Started and completed (44000-8000)	36000	100%	36000	100%	36000	100%	36000
Units in ending WIP inventory	6000	0%	0	100%	6000	50%	3000
Equivalent Units of production			44000		50000		47000
Summary of cost to be accounted
	Direct material	Transferred in	Conversion cost	Total
Cost in beginning WIP	100000	700000	400000	1200000
Cost incurred during Month (Add)	285000	212500	68025	565525
Total cost to be accounted for	385000	912500	468025	1765525
Cost per Equivalent Unit
Total cost to be accounted for	385000	912500	468025
Equivalent Units of production	44000	50000	47000
Cost per Equivalent Unit	8.75	18.25	9.957979	36.95798
Assign costs to units transferred out and units in ending WIP inventory
Cost assigned to units transferred out
Units completed and transferred out	44000	44000	44000
Cost per Equivalent Unit	8.75	18.25	9.957979
Cost assigned to units transferred out	385000	803000	438151.1	1626151
Cost assigned to units ending work in progress
Equivalent units in ending WIP inventory	0	6000	3000
Cost per Equivalent Unit	8.75	18.25	9.957979
Cost assigned to units ending work in progress	0	109500	29873.94	139373.9
Total cost assigned				1765525