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	70,000	70%	40%
Started into production	460,000
Completed and transferred out	450,000
Work in process, ending	80,000	75%	25%

	Materials		Conversion
Work in process, beginning	$	36,550	$	13,500
Cost added during June	$	391,850	$	287,300

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

Physical units

Particulars	units
Beginning work in process	70,000
Started into production	460,000
Total	530,000
Completed and transferred out	450,000
Ending work in process	80,000
Total	530,000

1 EQUIVALENT UNITS

Equivalent unit of materials

  = 450,000 + (80,000 × 75%) = 510,000 units

Equivalent unit of conversion cost

= 450,000 + (80,000 × 25%) = 470,000 units

2 COST PER EQUIVALENT UNIT

Cost per equivalent unit of materials

= (36,550 + 391,850) / 510,000 = .84 per unit

Cost per equivalent unit of conversion cost

= (13,500 + 287,300) / 470,000 = .64 per unit

3 COST OF ENDING WORK IN PROCESS

Material = (80,000 × 75%) × .84 = $50,400

Conversion cost = (80,000 × 25%) × .64 = $12,800

Total cost of ending work in process

= 50,400 + 12,800 = $63,200

4 COST OF UNITS TRANSFERRED OUT

Materials = 450,000 × .84 = $378,000

Conversion cost = 450,000 × .64 = $288,000

Total cost of units transferred out

= 378,000 + 288,000 = $666,000

5 Cost reconciliation report

Particulars	$
Beginning work in process cost:
Materials	36,550
Conversion cost	13,500
Cost added current period:
Materials	391,850
Conversion cost	287,300
Total cost to accounted for	729,200
Cost assigned to units completed and transferred out	666,000
Cost assigned to ending work in process	63,200
Total cost to accounted for	729,200

The above are the detailed calculations of process costing under weighted average method.

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