Question

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.

Answer 1

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