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	50,000	70%	40%
Started into production	265,000
Completed and transferred out	255,000
Work in process, ending	60,000	75%	25%

	Materials		Conversion
Work in process, beginning	$	16,600	$	5,000
Cost added during June	$	178,400	$	105,700

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	300,000	270,000

.

	Material	Conversion
Cost per equivalent Unit	$                                0.65	$                   0.41

.

	Material	Conversion
Ending Inventory	$ 29,250	$ 6,150	$ 35,400

.

	Material	Conversion
Units Completed and transferred	$ 165,750	$ 104,550	$ 270,300

.

Cost Reconciliation
Costs to be accounted for:
Beginning Wip cost	$ 21,600
Cost incurred during period	$ 284,100
Total cost to be accounted for	$ 305,700
Costs accounted for as follows:
Cost of Units Transferred Out	$ 270,300
Cost of Ending Wip	$ 35,400
Total cost accounted for	$ 305,700

Working

Statement of Equivalent Units(Weighted average)
				Material		Conversion
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	255,000			100%	255,000	100%	255,000
Ending WIP	60,000			75%	45,000	25%	15,000
Total	315,000			Total	300,000	Total	270,000

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion	TOTAL
Beginning WIP Inventory Cost (A)		$ 16,600	$ 5,000	$ 21,600
Cost incurred during period (B)		$ 178,400	$ 105,700	$ 284,100
Total Cost to be accounted for (C=A+B)		$ 195,000	$ 110,700	$ 305,700
Total Equivalent Units(D)		300,000	270,000
Cost per Equivalent Units (E=C/D)		$                   0.65	$                     0.41	$                        1.06

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$ 0.65	45,000	$          29,250.00	255,000	$        165,750.00
Conversion	$ 0.41	15,000	$             6,150.00	255,000	$        104,550.00
TOTAL	$ 305,700	TOTAL	$ 35,400	TOTAL	$ 270,300