Question

FIFO Method, Two-Department Analysis

Healthway uses a process-costing system to compute the unit costs of the minerals that it produces. It has three departments: Mixing, Tableting, and Bottling. In Mixing, at the beginning of the process all materials are added and the ingredients for the minerals are measured, sifted, and blended together. The mix is transferred out in gallon containers. The Tableting Department takes the powdered mix and places it in capsules. One gallon of powdered mix converts to 1,600 capsules. After the capsules are filled and polished, they are transferred to Bottling where they are placed in bottles, which are then affixed with a safety seal and a lid and labeled. Each bottle receives 50 capsules.

During July, the following results are available for the first two departments (direct materials are added at the beginning in both departments):

		Mixing			Tableting
Beginning inventories:
Physical units		5	gallons		4,000	capsules
Costs:
Direct materials		$120			$32
Direct labor		128			20
Overhead		?			?
Transferred in		—			140
Current production:
Transferred out		125	gallons		198,000	capsules
Ending inventory		6			6000
Costs:
Direct materials		$3,144			$1,584
Transferred in		—			?
Direct labor		4,096			1,944
Overhead		?			?
Percentage of completion:
Beginning inventory		40	%		50	%
Ending inventory		50			40

Overhead in both departments is applied as a percentage of direct labor costs. In the Mixing Department, overhead is 200 percent of direct labor. In the Tableting Department, the overhead rate is 150 percent of direct labor.

Required:

1. Prepare a production report for the Mixing Department using the FIFO method. Follow the five steps outlined in the chapter. If required, round your cost per equivalent unit answers to three decimal places and use them in subsequent computations. Round all other calculations and final answers to the nearest dollar.

Healthway
Mixing Department
Production Report for July 20XX
Unit Information
Units to account for:
Units, beginning work in process
Units started
Total units to account for
Units accounted for:
		Equivalent Units
	Physical Flow	Direct Materials	Conversion Costs
Units started and completed
Units, beginning work in process
Units, ending work in process
Total units accounted for
Cost Information
Costs to account for:
	Direct Materials	Conversion Costs	Total
Costs in beginning work in process	$	$	$
Costs added by department
Total costs to account for	$	$	$
Cost per equivalent unit	$	$	$
Costs accounted for:
	Transferred Out	Ending Work in Process	Total
Goods started and completed	$		$
Units, beginning work in process
Prior period
Current period
Ending work in process:
Direct materials		$
Conversion costs
Total costs accounted for	$	$	$

Feedback

Partially correct

2. Prepare a production report for the Tableting Department using the FIFO method. Follow the five steps outlined in the chapter. If required, round your cost per equivalent unit answers to four decimal places and use them in subsequent computations. Round all other calculations and final answers to the nearest dollar. If an amount is zero, enter "0".

Healthway
Tableting Department
Production Report for July 20XX
Unit Information
Units to account for:
Units, beginning work in process
Units started
Total units to account for
Units accounted for:
		Equivalent Units
	Physical Flow	Transferred In	Direct Materials	Conversion Costs
Units started and completed
Units, beginning work in process
Units, ending work in process
Total units accounted for
Cost Information
Costs to account for:
	Transferred In	Direct Materials	Conversion Costs	Total
Costs in beginning work in process	$	$	$	$
Costs added by department
Total costs to account for	$	$	$	$
Cost per equivalent unit	$	$	$	$
Costs accounted for:
		Transferred Out	Ending Work in Process	Total
Goods transferred out		$		$
Units, beginning work in process:
Prior period
Current period
Ending work in process:
Transferred in
Direct materials
Conversion costs
Total costs accounted for		$	$	$

Answer 1

Healthway

Mixing Department

Production Report for July 20XX

Unit Information

Units to account for:

      Units, beginning work in process...............................                 5

      Units started..............................................................             126

      Total units to account for...........................................             131

Units accounted for:

                                                                                                                      Equivalent Units         

                                                                                      Physical            Direct               Conversion

                                                                                         Flow            Materials                Costs     

      Units started and completed..........................             120                  120                        120

      Units, beginning work in process

            (to complete)   .........................................                 5                    —                            3

      Units, ending work in process.......................                  6                       6                            3

      Total units accounted for .............................             131                  126                        126

Cost Information

Costs to account for:

                                                                                      Direct              Conversion

                                                                                    Materials                Costs                Total   

      Costs in beginning work in process...............       $       120             $       384          $         504

      Costs added by department...........................             3,144                 12,288                15,432

      Total costs to account for..............................       $    3,264             $ 12,672          $    15,936**

Cost per equivalent unit.......................................       $ 24.952*            $ 97.524          $ 122.476

Costs accounted for:

                                                                                      Transferred      Ending Work

                                                                                             Out                 in Process            Total  

      Goods started and completed

            (120 × $122.476).....................................           $ 14,697*                   —               $ 14,697*

      Units, beginning work in process:

            Prior period..............................................                   504                    —                        504

            Current period (3 × $97.524)...................                   293*                  —                        293*

      Ending work in process:

            Direct materials (6 × $24.952).................                     —               $ 150*                      150*

            Conversion costs (3 × $97.524)...............                      —                  293*                       293*

      Total costs accounted for...............................           $ 15,494               $ 443                 $15,937**

      *Rounded.

      **Difference due to rounding.

Healthway

Tableting Department

Production Report for July 20XX

Unit Information

Units to account for:

      Units, beginning work in process.........................                4,000

      Units started........................................................            200,000

      Total units to account for.....................................            204,000

Units accounted for:

                                                                                                             Equivalent Units                  

                                                                      Physical       Transferred       Direct         Conversion

                                                                         Flow                   In             Materials          Costs     

      Units started and completed............        194,000           194,000        194,000           194,000

      Units, beginning work in

            process ........................................ .......... 4,000                    —                 —               2,000

      Units, ending work in                                                       

            process ........................................ ....       6,000               6,000             6,000                2,400

      Total units accounted for........................ 204,000           200,000        200,000           198,400

Cost Information

Costs to account for:

                                                                 Transferred          Direct            Conversion

                                                                          In                Materials               Costs            Total  

      Costs in beginning work in

            process ......................................    $       140            $         32            $         50      $       222

      Costs added by department............        15,494                  1,584                  4,860          21,938

      Total costs to account for .............. .. $ 15,634            $    1,616            $    4,910      $ 22,160**

Cost per equivalent unit .......................... $0.0775*            $0.0079*            $0.0245*      $0.1099*

*Rounded.

**Difference due to rounding.

Costs accounted for:

                                                                                       Transferred   Ending Work

                                                                                              Out              in Process            Total    

      Goods transferred out

            (194,000 × $0.1099)......................................         $21,321*               —              $21,321*

      Units, beginning work in process:

            Prior period....................................................                222                 —                     222

            Current period (2,000 × $0.0245)..................                  49                 —                       49

      Ending work in process:

            Transferred in (6,000 × $0.0775)...................                  —             $465*                   465*

            Direct materials (6,000 × $0.0079)................                  —                 47*                     47*

            Conversion costs (2,400 × $0.0245)..............                  —                 59*                     59*

      Total costs accounted for.....................................         $21,592             $571              $22,163**

        *Rounded.

      **Difference due to rounding.