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

Equivalent units of production (EUP)­ FIFO method
	Units	% Materials	EUP­ Materials	% Conversion	Conversion
Beginning WIP	10000	0.00%	0	70.00%	7000
Units Started and completed	150000	100.00%	150000	100.00%	150000
Ending goods in process ­ units	20000	100.00%	20000	40.00%	8000
Equivalent units of production	180000		170000		165000

Cost Per Equivalent unit of Production			Direct Material		Conversion
Costs incurred this period			139400		244200
Total Costs		Costs	139400	Costs	244200
Equivalent Unit of Production			170000		165000
Cost Per Equivalent unit of Production			0.82		1.48

Cost of Units Transferred out	EUP	Cost Per EUP	Total Cost
Beginning WIP			13400
Cost incured for processing beginning WIP
Direct Material	0.00	0.82	0
Conversion	7,000	1.48	10360
Direct Material	150000	0.82	123,000.00
Conversion	150000	1.48	222,000.00
Total Cost Transferred out			368760
Cost of Ending Work in Progress	EUP	Cost Per EUP	Total Cost
Direct Material	20000	0.82	16,400.00
Conversion	8000	1.48	11,840.00
Total Cost of Ending Work in Progress			28,240.00

Cost Reconciliation
Costs to be accounted for:
Cost of beginning work in process inventory	13,400.00
Costs added to production during the period	383,600.00
Total cost to be accounted for	397,000.00
Total Cost accounted for
Total Cost Transferred out	368,760.00
Total Cost of Ending Work in Progress	28,240.00
Total Cost accounted for	397,000.00