In: Accounting
Selzik Company makes super-premium cake mixes that go through two processing departments—Blending and Packaging. The following activity was recorded in the Blending Department during July:
Production data: | |||
Units in process, July 1 (materials 100% complete; conversion 30% complete) | 10,000 | ||
Units started into production | 170,000 | ||
Units in process, July 31 (materials 100% complete; conversion 40% complete) | 20,000 | ||
Cost data: | |||
Work in process inventory, July 1: | |||
Materials cost | $ | 8,500 | |
Conversion cost | $ | 4,900 | |
Cost added during the month: | |||
Materials cost | $ | 139,400 | |
Conversion cost | $ | 244,200 | |
All materials are added at the beginning of work in the Blending Department. The company uses the FIFO method in its process costing system.
Required:
1. Calculate the Blending Department's equivalent units of production for materials and conversion for July.
2. Calculate the Blending Department's cost per equivalent unit for materials and conversion for July.
3. Calculate the Blending Department's cost of ending work in process inventory for materials, conversion, and in total for July.
4. Calculate the Blending Department's cost of units transferred out to the next department for materials, conversion, and in total for July.
5. Prepare a cost reconciliation report for the Blending Department for July.
1. Calculate the Blending Department's equivalent units of production for materials and conversion for July.
Physical unit | % | EUP-,material | % | EUP-conversiont | |
Beginning WIP | 10000 | 0% | 0 | 70% | 7000 |
Unit started and completed | 150000 | 100% | 150000 | 100% | 150000 |
Ending WIP | 20000 | 100% | 20000 | 40% | 8000 |
Equivalent unit of production | 180000 | 170000 | 165000 | ||
2. Calculate the Blending Department's cost per equivalent unit for materials and conversion for July.
Material | Conversion | |
Cost added | 139400 | 244200 |
Equivalent unit of production | 170000 | 165000 |
Cost per equivalent unit | 0.82 | 1.48 |
3. Calculate the Blending Department's cost of ending work in process inventory for materials, conversion, and in total for July.
Material | Conversion | Total | |
Cost of ending work in process | 20000*.82 = 16400 | 8000*1.48 = 11840 | 28240 |
4. Calculate the Blending Department's cost of units transferred out to the next department for materials, conversion, and in total for July.
Material | Conversion | Total | |
Beginning WIP | 8500 | 4900 | 13400 |
Cost added | 150000*.82 = 123000 | 157000*1.48 = 232360 | 355360 |
Total cost of unit transferred out | 131500 | 237260 | 368760 |
5. Prepare a cost reconciliation report for the Blending Department for July.
Cost to be accounted for | |
Beginning work in process | 13400 |
Cost added | 383600 |
Total cost to be accounted for | 397000 |
Cost accounted as | |
Cost of unit transferred out | 368760 |
Cost of ending WIP | 28240 |
Total cost accounted as | 397000 |