Question

Logan Chemical Company produces a chemical agent for commercial use. The company accounts for production in two departments: (1) Cooking, and (2) Bottling. In the first department, liquid substances are combined in large cookers and boiled. After the liquid is cooked, it is transferred to the Bottling Department where dye is added and the chemical is bottled. All material is added at the beginning of production in the Cooking Department and the company uses the first-in, first-out method of process costing. Costs in process in the Cooking Department in January were as follows: Work-in-process, January 1: Materials $4,200 Direct labor 350 Overhead 410 Costs Added in January: Materials $92,400 Direct Labor 19,350 Overhead 21,600 Inventory records show the Cooking Department's January 1 inventory consisted of 1,000 gallons, 40 percent processed, and the January 31 inventory consisted of 4,000 gallons, 60 percent processed. In January, 20,000 gallons were started in the Cooking Department and 17,000 gallons were transferred to Bottling. a. Using FIFO process costing, calculate the equivalent units in the Cooking Department for January b. Calculate the cost per equivalent unit in the Cooking Department for January (round to 2 decimal places). c. Calculate the cost of the January 31 work-in-process inventory in the Cooking Department.

Answer 1

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet. For detailed answer refer to the supporting sheet.

Answer 2 Part 1) Cooking Department Equivalent units whole units 1000 Direct Material 6 Inventory in process January 1 3 started and completed (17000-1000) 16000 16000 (16000*100%) 16000 4000 Conversion 600 91000*60%) 16000 (16000*100%) 16600 2400 (4000*60%) 19000 10 Transferred to Bottling department 11 inventory in process january 31 17000 4000 13 Equivalent units 21000 20000 15 Thus the final answer Direct Material 20000 conversion 19000 17 Equivalent units

19 Part 2) Cost information Cost per equivalent unit 24 Total cost to be accounted 25 Total Equivalent units 26 Cost Per Equivalent unit Direct Material 92400 20000 4.62 Conversion 40950 19000 2.16 28 Thus the final answer Direct Material 4.62 conversion 2.16 Total Unit Cost 6.78 BO Cost Per Equivalent unit 32 Part 3) 33 Cost of ending work in process on january 31 34 = (direct material equivalent unit * cost per unit of direct material )+ (conversion cost equivalent unit * cost per unit of conversion cost) 35 = (4000* 4.62)+(2400*2.16) 36 = 23653 38 Thus the correct answer is $ 23653