Question

Sunspot Beverages, Ltd., of Fiji uses the weighted-average method in its process costing system. It makes blended tropical fruit drinks in two stages. Fruit juices are extracted from fresh fruits and then blended in the Blending Department. The blended juices are then bottled and packed for shipping in the Bottling Department. The following information pertains to the operations of the Blending Department for June.

		Percent Completed
	Units	Materials	Conversion
Work in process, beginning	66,000	70%	40%
Started into production	333,000
Completed and transferred out	323,000
Work in process, ending	76,000	75%	25%

	Materials		Conversion
Work in process, beginning	$	24,000	$	8,300
Cost added during June	$	257,200	$	176,380

Required:

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

2. Calculate the Blending Department's cost per equivalent unit for materials and conversion in June.

3. Calculate the Blending Department's cost of ending work in process inventory for materials, conversion, and in total for June.

4. Calculate the Blending Department's cost of units transferred out to the Bottling Department for materials, conversion, and in total for June.

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

Answer 1

Solution 1:

Computation of Equivalent unit of Production - Weighted Average (Blending Department)
Particulars	Physical Units	Material	Conversion
Unit completed & Transferred out	323000	323000	323000
Closing WIP:	76000
Material (75%)		57000
Conversion (25%)			19000
Equivalent units of production	399000	380000	342000

Solution 2:

Computation of Cost per equivalent unit of Production - Weighted Average (Blending Department)
Particulars	Material	Conversion
Opening WIP	$24,000.00	$8,300.00
Cost Added during June	$257,200.00	$176,380.00
Total cost to be accounted for	$281,200.00	$184,680.00
Equivalent units of production	380000	342000
Cost per Equivalent unit	$0.74	$0.54

Solution 3 & 4:

Computation of Cost of ending WIP and units completed & transferred out - Weighted Average (Blending Department)
Particulars	Material	Conversion	Total
Equivalent unit of Ending WIP	57000	19000
Cost per equivalent unit	$0.74	$0.54
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	$42,180	$10,260	$52,440
Units completed and transferred	323000	323000
Cost of units completed & Transferred (Unit completed * cost per equivalent unit)	$239,020	$174,420	$413,440

Solution 5:

Cost Reconciliation Report - Blending Department
Particulars	Amount
Costs to be accounted for:
Cost of beginning WIP inventory ($24,000 + $8,300)	$32,300.00
Cost added to production ($257,200 + $176,380)	$433,580.00
Total Cost to be accounted for	$465,880.00
Costs accounted for as follows:
Cost of unit transferred out	$413,440
Ending WIP:
Material	$42,180
Converison	$10,260
Total cost accounted for	$465,880