Question

Newton Corporation uses a process costing system to trace costs through several phases of produc- tion, starting with the Blending Department and ending with the Packaging Department. Recent computer problems have caused some of the company’s accounting records to be destroyed. Shown below is a partial summary of information retrieved by accountants from the Blending Depart- ment’s February production cost report:

Cost Data: Blending Department Direct materials costs in beginning inventory, February 1 . . . . . . . . . . . . . . . . . .	$ 12,000
Conversion costs in beginning inventory, February 1 . . . . . . . . . . . . . . . . . . . . . .	25,200
Direct materials costs incurred in February . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	162,000
Conversion costs incurred in February . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	271,000
Cost per equivalent unit of conversion in February. . . . . . . . . . . . . . . . . . . . . . . .	5
Physical Units: Blending Department Units in process, February 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	?
Units transferred out during February. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	58,000
Units started in February . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	54,000
Units in process, February 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2,000
Percentage of Completion: Blending Department Direct materials, February 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	100%
Conversion, February 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	?
Direct materials, February 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	100%
Conversion, February 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20

a.      Compute the number of units that were in the Blending Department’s beginning inventory on February 1.

b.      Compute the number of units that were started and completed by the Blending Department in February.

                                                                                                                                                                                                                       

c.    Compute the cost per equivalent unit of direct materials and conversion carried forward from

January and assigned to the Blending Department’s beginning inventory on February 1.

d.       Compute the Blending Department’s cost per equivalent unit of direct materials consumed in

February.

Answer 1

Req a:
Units acounted for:
units completed and transferred out					58000
Add: Ending WIP units					2000
Total units acccounted for					60000
Less: Units started in the production					-54000
Units In the beginning work in process inventory					6000
Req b:
Units started and completed by Blending deptt:
Total units completed					58000
Less: Units completed from beginning WIP					-6000
Units started and completed by Blending deptt:					52000
Req c:
Total Equivalent units of conversion in current month based on FIFO:
Total cost incurred:					271000
Divide: Conversion cost per unit					5
Equivalent conversion cost units					54200
Less: equivalent units of units strated and completed					52000
Less: equiv. units of Ending WIP (2000*20%)					400
Equivalent units of Beginning WIP completed during the month					1800
Therfore percentage completion:70%
Material and conversion cost per unit in Beg.WIP
					Material	Conversion
Cost in beginning WIP					12000	25200
UNIts					6000	6000
% coompletion					100%	70%
Equivalent units					6000	4200
Cost per equivalent units					2	6
Req D:
Equivalent units of material:
Units started and completed				52000
Add: Equiv. units of ending WIP(2000*100%)				2000
Total equivalent units				54000
Total material cost				162000
Material cost pepr equiv. units				3