Question

Problem 4-15 Comprehensive Problem-Weighted-Average Method [LO4-2, LO4-3, LO4-4, LO4-5]

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	72,000	70%	40%
Started into production	358,500
Completed and transferred out	348,500
Work in process, ending	82,000	75%	25%

	Materials		Conversion
Work in process, beginning	$	26,900	$	9,400
Cost added during June	$	288,800	$	200,930

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

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

	Material	Conversion
Completed and transferred out	348500	348500
Ending work in process	82000*75% = 61500	82000*25% = 20500
Equivalent unit of production	410000	369000

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

	Material	Conversion
Work in process, beginning	26900	9400
Cost added during June	288800	200930
Total Cost	315700	210330
Equivalent unit	410000	369000
Cost per equivalent unit	0.77	0.57

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

	Material	Conversion	Total
cost of ending work in process	82000*75%*.77 = 47355	82000*25%*.57 = 11685	59040

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

	Material	Conversion	Total
Cost of units transferred out	348500*.77 = 268345	348500*.57 = 198645	466990

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

Cost to be accounted for
Beginning work in process	36300
Cost added	489730
Total Cost to be accounted for	526030
Cost accounted as
Cost of units transferred out	466990
Cost of ending work in process	59040
Total cost accounted as	526030