Question

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Eire Products is a specialty lubricants company. The Lake Plant produces a single product in three...

Eire Products is a specialty lubricants company. The Lake Plant produces a single product in three departments: Filtering, Blending, and Packaging. Additional materials are added in the Blending Process when units are 50 to 55 percent complete with respect to conversion. Information for operations in June in the Blending process appear as follows.

Work in process on June 1 consisted of 9,000 barrels with the following costs.

  

Amount

Degree of completion

Filtering costs transferred in

$        11,700  

100%

Cost added in Blending

Direct materials

$                 -    

0%

Conversion costs

$        18,335  

30%

Work in process June 1

$        30,035  

  

During June, 116,000 barrels were transferred in from Filtering at a cost of $150,800. The following costs were added in Blending in June.

Direct materials

$     387,500  

Conversion costs

$     538,265  

Total costs added  

$     925,765  

  

Blending finished 115,000 barrels in June and transferred them to Packaging. At the end of June, there were 10,000 barrels in work-in-process inventory. The units were 60 percent complete with respect to conversion costs. The Blending Department uses FIFO method of process costing.  

Required: Prepare a cost of production report for Blending department for June.

A

B

C

D

1

(Step 1)

(Step 2)

Equivalent Units

2

3

Flow of production

Physical units

Direct Material

Conversion Cost

4

Beginning WIP

9,000

Work done before current period

5

Started during current period

116,000

6

To Account For

125,000

7

Completed and transferred out during current period:

115,000

8

From beginning WIP

9,000

9

{9000 x (100% -50%); 9000 x (100% - 55%)

4500

4950

10

Started and completed

106,000

11

(106,000 x 100%; 106,000 x 100%)

106,000

106,000

12

Ending WIP

10,000

13

10,000 x 100%; 10,000 x 60%

10,000

6,000

14

Accounting for

125,000

15

Equivalent units of work done in current period

120,500

116,950

16

Total Production Costs

Direct Material

Conversion  

Costs

Step 3  

Beginning WIP

+

Cost added in current period

+

Total costs to account for

+

Step 4

Cost added in current period

Divide by equivalent units of work done in current period

Costs per equivalent unit of work done in current period

Step 5

Assignment of costs:

Completed and transferred out

Beginning WIP

+

Costs added to beginning WIP in current period

+

        Total from beginning inventory

Started and completed

+

        Total cost of units completed and transferred out

Ending WIP

+

        Total costs accounted for

+

Solutions

Expert Solution

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Eire Products
Started and completed in June: Whole Units
Units completed in June    115,000.00
Less: Opening Inventory         9,000.00
Started and completed in June:    106,000.00
Eire Products
Blending Process
Cost of Production Report- FIFO Equivalent Units
Whole Units Total costs Prior Departmental costs Materials Conversion
Flow of production of units:
Units charged to production:
Opening Inventory in process            9,000.00
Units started in June       116,000.00
Total units to be accounted for       125,000.00
Units accounted for
Units completed and transferred out
From beginning Inventory            9,000.00                                -            9,000.00          6,300.00
Started and completed currently       106,000.00                106,000.00     106,000.00     106,000.00
Units ending in WIP Inventory         10,000.00                  10,000.00        10,000.00          6,000.00
Total Units accounted for       125,000.00               116,000.00     125,000.00     118,300.00
Costs to be accounted for
Costs in beginning WIP Inventory         30,035.00                  11,700.00                      -          18,335.00
Current period costs 1,076,565.00                150,800.00     387,500.00     538,265.00
Total costs to be accounted for 1,106,600.00               162,500.00     387,500.00     556,600.00
Costs per equivalent unit
Prior Departmental costs                            1.30
Materials                  3.10
Labor                  4.55
Manufacturing Overhead
Costs accounted for
Costs assigned to units transferred out
Costs from beginning WIP inventory         30,035.00                  11,700.00                      -          18,335.00
Current costs added to complete beginning WIP inventory
Prior Departmental costs                        -                                  -  
Materials         27,900.00        27,900.00
Labor         28,665.00        28,665.00
Manufacturing Overhead                        -  
Total costs from beginning inventory         86,600.00
Current costs of units started and completed
Prior Departmental costs       137,800.00                137,800.00
Materials       328,600.00     328,600.00
Labor       482,300.00     482,300.00
Manufacturing Overhead                        -  
Total costs of units started and completed       948,700.00
Total Costs of units transferred out 1,035,300.00
Costs assigned to ending WIP inventory
Prior Departmental costs         13,000.00                  13,000.00
Materials         31,000.00        31,000.00
Labor         27,300.00        27,300.00
Manufacturing Overhead                        -  

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