Question

In: Accounting

Selzik Company makes super-premium cake mixes that go through two processing departments—Blending and Packaging. The following...

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.

Solutions

Expert Solution

1. Calculate the Blending Department's equivalent units of production for materials and conversion for July.

Physical unit % EUP-Material % EUP-Conversion
Beginning WIP 10000 0% 0 70% 7000
Unit started and completed (160000-10000) 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 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 WIP 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 131500 237260 368760

5. Prepare a cost reconciliation report for the Blending Department for July.

Cost to be accounted for
Beginning WIP (8500+4900) 13400
Cost added (139400+244200) 383600
Total Cost to be accounted for 397000
Cost accounted as
Cost of goods transferred out 368760
Cost of ending WIP 28240
Cost accounted as 397000

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