Question

PROBLEM 5-15 Comprehensive Problem-Weighted-Average Method L05-2, L05-3, LOS LO5-5 Sunspot Beverages, Ltd., of Fiji uses the weighted average method in its process costing system. It make blended tropical fruit drinks in two stages. Fruit juices are extracted from fresh fruits and then blend in the Blending Department. The blended juices are then bottled and packed for shipping in the Boll Department. The following information pertains to the operations of the Blending Department for June Percent Completed Materials Conversion 100% 75% Work in process, beginning ........ Started into production ............ Completed and transferred out ..... Work in process, ending ........... Units 20,000 180,000 160,000 40.000 100% 25% Materials $25,200 $334,800 Conversion $24.800 $238,700 Work in process, beginning ........ Cost added during June ........... 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.

Answer 1

1) Equivalent unit

	Material	Conversion
Unit transferred out	160000	160000
Ending WIP	40000	40000*25% = 10000
Total	200000	170000

2) Cost per equivalent unit

	Material	Conversion
Beginning WIP	25200	24800
Cost added	334800	238700
Total Cost	360000	263500
Equivalent unit	200000	170000
Cost per equivalent unit	1.8	1.55

3) Cost of ending WIP

	Material	Conversion	Total
Cost of ending WIP	40000*1.8 = 72000	10000*1.55 = 15500	87500

4) Cost of Unit transferred out

	Material	Conversion	Total
Cost of Unit transferred out	160000*1.8 = 288000	160000*1.55 = 248000	536000

5) Cost reconciliation

Cost to be accounted for
Beginning WIP	50000
Cost added	573500
Total cost to be accounted for	623500
Cost accounted as
Cost of unit transferred out	536000
Ending WIP	87500
Total cost accounted for	623500