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: 10,000 170,000 20,000 Production data: Units in process, July 1 (materials 100% complete; conversion 30% complete) Units started into production Units in process, July 31 (materials 100% complete; plete; conversion 40% complete) Cost data: Work in process inventory, July 1: Materials cost Conversion cost Cost added during the month: Materials cost Conversion cost $ $ 8,500 4,900 $ $ 139,400 244,200 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

1) Equivalent unit

	Whole unit	% material	EUP-Material	% Conversion	EUP-Conversion
Beginning WIP	10000	0%	0	70%	7000
Unit started and completed	150000	100%	150000	100%	150000
Ending work in process	20000	100%	20000	40%	8000
Equivalent unit	180000		170000		165000

2) Cost per equivalent unit

	Material	Conversion
Cost added	139400	244200
Equivalent unit	170000	165000
Cost per equivalent unit	0.82	1.48

3) Cost of ending work in process

	Material	Conversion	Total
Cost of ending work in process	20000*.82 = 16400	8000*1.48 = 11840	28240

4) Cost of unit transferred out

	Material	Conversion	Total
Beginning WIP	8500	4900+7000*1.48 = 15260	23760
Cost of unit started and completed	123000	222000	345000
Total cost of unit transferred out	131500	237260	368760

5) Cost reconciliation

Cost accounted for
Beginning WIP	13400
Cost added	383600
Total cost accounted for	397000
Cost accounted as
Cost of unit transferred out	368760
Cost of ending WIP	28240
Total cost accounted as	397000