Question

4. Process Costing – Equivalent units of production, Weighted Average Method (7pts): The Lost Moon of Poosh, Inc. is a sports drink manufacturer who uses process costing to account for its production costs each period. The Lost Moon of Poosh uses two departments in the production of its product – Blending and Bottling. The following is information obtained for the Blending department for the month of January:

                Work in process (WIP) inventory, beginning balance:

                                Units in beginning WIP: 19,000

                                DM costs in beginning WIP: $91,000

                                Conversion Costs in beginning WIP: $49,400

                Units started / costs incurred during January:

                                Units started: 65,700

                                DM costs incurred: $167,500

                                Conversion Costs incurred: $85,900

At the end of January, as of January 31^st, there were 17,300 units left in ending WIP inventory. These partially completed units were 75% complete with respect to DM and 40% complete with respect to Conversion Costs. Use the Weighted-Average method to answer the questions below.

1. 1pt: Calculate how many units were completed and transferred out to the Bottling Department during January.

2. 2pts: Calculate the Equivalent Units of Production (EUP) for January for both DM and Conversion Costs.

3. 2pts: Calculate the cost per EUP for January for both DM and Conversion Costs. Round your final answer to two decimal places.

4. 1pt: Assign costs to the units completed and transferred out of the Blending Department to the Bottling Department during January.

5. 1pt: Assign costs to the units remaining in the Blending Department’s ending WIP inventory as of January 31^st.

Answer 1

a)

Units completed and transferred out

67400

b)	Equivalent Units of Production (EUP) - Weighted Average Method
					Units	% Mat.	EUP- Mat.	% Conv.	EUP- Conv.
	Units completed and transferred out				67400	100%	67400	100%	67400
	Units in ending inventory				17300	75%	12975	40%	6920
	Equivalent units of production						80375		74320

Note: There might be some differences in the solution because of decimals

c)	Cost per Equivalent Unit of Production
						Materials		Conversion
	Beginning costs					$      91,000.00		$    49,400.00
	During the month costs					$   1,67,500.00		$    85,900.00
	Total cost				Costs	$   2,58,500.00	Costs	$ 1,35,300.00
	÷	Equivalent units of production			EUP	80375	EUP	74320
	Cost per equivalent unit of production					$                3.22		$              1.82

d)	Cost of units transferred out				EUP	Cost/ EUP	Total Cost
	Direct Materials				67400	$      3.22	$   2,16,770.14
	Conversion				67400	$      1.82	$   1,22,702.10
	Total costs transferred out						$   3,39,472.24

e)	Cost of ending work in process				EUP	Cost/ EUP	Total Cost
	Direct Materials				12975	$      3.22	$      41,729.86
	Conversion				6920	$      1.82	$      12,597.90
	Total cost of ending work in process						$      54,327.76