Question

Calculate Equivalent Units, Unit Costs, and Transferred Costs—FIFO Method Kipling Manufacturing, Inc., operates a plant that produces its own regionally-marketed Super Salad Dressing. The dressing is produced in two processes, blending and bottling. In the Blending Department, all materials are added at the beginning of the process, and labor and overhead are incurred evenly throughout the process. Kipling uses the FIFO method. The Work in Process- Blending Department account for January 2016 follows: Work in Process - Blending Department January 1 inventory (4,000 gallons, 75% processed) $80,000 Transferred to Bottling Department (70,000 gallons) January charges: Direct material (71,000 gallons) 1,136,000 409,500 Manufacturing overhead 500,500 January 31 inventory ( gallons, 60% processed) Direct labor Calculate the following amounts for the Blending Department: a. Number of units in the January 31 inventory. b. Equivalent units for materials and conversion costs. C. January cost per equivalent unit for materials and conversion costs. d. Cost of the units transferred to the Bottling Department. e. Cost of the incomplete units in the January 31 inventory

Answer 1

Kipling Manufacturing

Answers:

Calculate the following amount for the blending department:{Refer through workings}

a. Number of units in the January 31 inventory.

b. Equivalent units for materials and conversion costs.

c. January cost per equivalent unit for materials and conversion cost

d. Cost of the units transferred to the botting department.

e. Cost of the incomplete units in the January 31 inventory

Workings:

Started and completed in January	Gallons
Goods finished in January-	70,000
Less: Opening work in process	4,000
Started and completed in January	66,000

Cost of Production Report-Blending Department
For the Month Ended January 31		Equivalent Units
Unit information	Physical Units	Materials	Conversion
Units charged to production:
Inventory in process January 1	4,000.00
Received from materials storeroom	71,000.00
Total units accounted for by the Blending Department	75,000.00
Units to be assigned costs:
Inventory in process January 1	4,000.00	-	1,000.00(4000*25%)
Started and completed in January	66,000.00	66,000.00	66,000.00
Transferred to Bottling Department in January	70,000.00	66,000.00	67,000.00
Inventory in process, January 31	5,000.00	5,000.00	3,000.00(5000*60%)	This is answer a.
Total units to be assigned costs:	75,000.00	71,000.00	70,000.00	This is answer b.

Cost Information			Total
Costs per equivalent unit	Materials	Conversion
Total costs for January in Blending Department	11,36,000.00	9,10,000.00
Total equivalent units	71,000	70,000
Cost per equivalent unit	16.00	13.00		This is answer c.
Costs assigned to production:
Inventory in process, January 1			80,000.00
Costs incurred in January	11,36,000.00	9,10,000.00	20,46,000.00
Total costs accounted for by the Blending Department			21,26,000.00
Costs allocated to completed and partially completed units
Inventory in process, January 1 balance			80,000.00
To complete inventory in process, January 1	-	13,000.00	13,000.00	((13per unit cost of conversion *25%)*4000)
Cost of completed January 1 work in process			93,000.00
Started and completed in January	(16*66000) = 1056000	(13*66000) = 858000	19,14,000.00
Transferred to Bottling Department in January			20,07,000.00	This is answer d.
Inventory in process, January 31	(16*5000) = 80000	(13*3000)= 39000	1,19,000.00	This is answer e.
Total costs assigned by the Blending Department			21,26,000.00