Question

Eire Products is a specialty lubricants company. The Lake Plant produces a single product in three departments: Filtering, Blending, and Packaging. Additional materials are added in the Blending Process when units are 50 to 55 percent complete with respect to conversion. Information for operations in June in the Blending process appear as follows. 

Work in process on June 1 consisted of 9,000 barrels with the following costs. 

	Amount	Degree of completion
Filtering costs transferred in	$        11,700	100%
Cost added in Blending
Direct materials	$                 -	0%
Conversion costs	$        18,335	30%
Work in process June 1	$        30,035

  

During June, 116,000 barrels were transferred in from Filtering at a cost of $150,800. The following costs were added in Blending in June. 

Direct materials	$     387,500
Conversion costs	$     538,265
Total costs added	$     925,765

  

Blending finished 115,000 barrels in June and transferred them to Packaging. At the end of June, there were 10,000 barrels in work-in-process inventory. The units were 60 percent complete with respect to conversion costs. The Blending Department uses FIFO method of process costing.  

Required: 1. Prepare a cost of production report for Blending department for June. 

2. Journal entries for (1) T/I cost; (2) DM used; (3) CC allocated; (4) units completed 

T-accounts of WIP- Blending 

Answer 1

For Transferred in  100% unit completed in the previous period. It means the remaining 0% completed in this month.

For Direct material 0% unit completed in the previous period. It means the remaining 100% completed in this month.

For Conversion cost 30% unit completed in the previous period. It means the remaining 70% completed in this month.

Part 1

Part 2

Journal entries
Date	Account title	Debit	Credit
1	Work in progress - Blending	150,800
	Work in progress - Filtering		150,800
	(To record cost of transferred in from Filtering.)
2	Work in progress - Blending	387,500
	Raw material inventory		387,500
	(To record direct material used.)
3	Work in progress - Blending	538,265
	Conversion costs (Labor + Manufacturing overhead)		538,265
	(To record CC allocated.)
4	Work in progress - Packaging	1,035,300
	Work in progress - Blending		1,035,300
	(To record cost of unit transferred to next process.)

Work in progress - Blending
Beg. Balance	30,035	4 (cost of completed)	1,035,300
1	150,800
2	387,500
3	538,265
End. Balance	71,300