Question

Chelsea Manufacturing, Inc., operates a plant that produces its own regionally-marketed Super Salad Dressing. The dressing is produced in two processes, blending and bottling. In the Blending Department, all materials are added at the beginning of the process, and labor and overhead are incurred evenly throughout the process. Chelsea uses the weighted average method. The Work in Process—Blending Department account for January 2019 follows:

Work in Process-Blending Department
January 1 inventory (4,000 gallons, 75% finished)
Direct material	$31,200
Conversion costs	8,800
Transferred to Bottling Department (70,000 gallons)
January charges:
Direct material (71,000 gallons)	568,800
Direct labor	164,000
Manufacturing overhead	184,900
January 31 inventory [ ? gallons, 60% processed]

Required

Calculate the following amounts for the Blending Department:

1. Number of units in the January 31 inventory.

2. Equivalent units for materials cost and conversion costs.

3. January cost per equivalent unit for materials and conversion costs.

4. Cost of the units transferred to the Bottling Department.

5. Cost of the incomplete units in the January 31 inventory.

Answer 1

Solution

1. Number of units in the January 31 inventory= 5000 units

2. Equivalent units for materials cost and conversion costs

   	Material	Conversion
   Equivalent Units of Production	75,000	73,000

3. January cost per equivalent unit for materials and conversion costs.

   	Material	Conversion
   Cost per equivalent Unit	$                    8.00	$              4.90

4. Cost of the units transferred to the Bottling Department.

   	Material	Conversion	Total
   Units Completed and transferred	$ 560,000	$ 343,000	$ 903,000

5. Cost of the incomplete units in the January 31 inventory.

   	Material	Conversion	Total
   Ending Inventory	$ 40,000	$ 14,700	$ 54,700

Working

Reconciliation of Units
A	Opening WIP	4,000
B	Introduced	71,000
C=A+B	TOTAL	75,000
D	Transferred	70,000
E=C-D	Closing WIP	5,000

.

Statement of Equivalent Units(Weighted average)
				Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred	70,000			100%	70,000.0	100%	70,000
Closing WIP	5,000			100%	5,000.0	60%	3,000
Total	75,000			Total	75,000.0	Total	73,000

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion cost	TOTAL
Beginning WIP Inventory Cost		$ 31,200	$ 8,800	$ 40,000
Cost incurred during period		$ 568,800	$ 348,900	$ 917,700
Total Cost to be accounted for		$ 600,000	$ 357,700	$ 957,700
Total Equivalent Units		75,000	73,000
Cost per Equivalent Units		$            8.000	$                   4.900

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$ 8.00	5,000	$          40,000.00	70,000	$ 560,000
Conversion cost	$ 4.90	3,000	$          14,700.00	70,000	$ 343,000
TOTAL	$ 957,700	TOTAL	$ 54,700	TOTAL	$ 903,000