Question

Zero beginning inventory, materials introduced in middle of process. Roary Chemicals has a Mixing Department and a Refining Department. Its process-costing system in the Mixing Department has two direct materials cost categories (Chemical P and Chemical Q) and one conversion costs pool. The following data pertain to the Mixing Department for July 2009:

Chemical P is introduced at the start of operations in the Mixing Department and Chemical U is added when the product is three-fourths completed in the Mixing Department. Conversion costs are added evenly during the process. The ending work in process in the Mixing Department is two-thirds complete.

1. Compute the equivalent units in the Mixing Department for July 2009 for each cost category.

2. Compute (a) the cost of goods completed and transferred to the Refining Department during July and (b) the cost of work in process as of July 31, 2009.

Answer 1

Zero beginning inventory, materials introduced in middle of process.

 

1.         

Solution Exhibit 17-18A shows equivalent units of work done in the current period of Chemical P, 50,000; Chemical Q, 35,000; Conversion costs, 45,000.

 

SOLUTION EXHIBIT 17-18A

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;

Mixing Department of Roary Chemicals for July 2009.

 

2.         

Solution Exhibit 17-18B summarizes the total Mixing Department costs for July 2009, calculates cost per equivalent unit of work done in the current period for Chemical P, Chemical Q, and Conversion costs, and assigns these costs to units completed (and transferred out) and to units in ending work in process.

 SOLUTION EXHIBIT 17-18B

Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit, and Assign Total Costs to Units Completed and to Units in Ending Work in Process;

 

Mixing Department of Roary Chemicals for July 2009.

 

*Equivalent units completed and transferred out from Solution Exhibit 17-18A, Step 2.

†Equivalent units in ending work in process from Solution Exhibit 17-18A, Step 2.