Question

Sunspot Beverages, Ltd., of Fiji uses the weighted average method in its process costing system. It makes blended tropical fruit drinks in two stages. Fruit juices are extracted from fresh fruits and then blended in the Blending Department. The blended juices are then bottled and packed for shipping in the Bottling Department. The following information pertains to the operations of the Blending Department for June. Percent Completed Materials Conversion 708 40% Work in process, beginning Started into production Completed and transferred out Work in process, ending Units 78,000 384,000 374,000 88,000 75% 25% Work in process, beginning Cost added during June Materials Conversion $ 30, 400 $ 10,800 $ 326,000 $ 230,760 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. 4. Calculate the Blending Department's cost of units transferred out to the Bottling Department for materials, conversion, and in total for June. 5. Prepare a cost reconciliation report for the Blending Department for June.

Answer 1

Solution 1:

Sunspot Beverages Ltd
Blending Department
Computation of Equivalent unit of Production
Particulars	Physical Units	Material	Conversion
Units to account for:
Beginning WIP	78000
Started into Production	384000
Total units to account for	462000
Units accounted for:
Unit completed & Transferred out	374000	374000	374000
Units in ending inventory:	88000
Material (75%)		66000
Conversion (25%)			22000
Equivalent units of production	462000	440000	396000

Solution 2:

Sunspot Beverages Ltd Computation of Cost per equivalent unit - Blending department
Particulars	Material	Conversion	Total
Opening WIP	$30,400	$10,800	$41,200
Cost Added during Period	$326,000	$230,760	$556,760
Total cost to be accounted for	$356,400	$241,560	$597,960
Equivalent units of production	440000	396000
Cost per Equivalent unit	$0.81	$0.61

Solution 3 & 4:

Sunspot Beverages Ltd Computation of Cost of ending WIP and units completed & transferred out - Blending Department
Particulars	Material	Conversion	Total
Equivalent unit of Ending WIP	66000	22000
Cost per equivalent unit	$0.81	$0.61
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	$53,460	$13,420	$66,880
Units completed and transferred	374000	374000
Cost of units completed & Transferred (Unit completed * cost per equivalent unit)	$302,940	$228,140	$531,080

Solution 5:

Cost reconciliation - Blending Department
Particulars	Amount
Costs to be accounted for:
Cost of beginning WIP inventory	$41,200.00
Cost added to production	$556,760.00
Total Costs to be accounted for	$597,960.00
Costs accounted for as follows:
Cost of unit transferred out	$531,080
Ending WIP:
Material	$53,460
Converison	$13,420
Total Ending WIP	$66,880
Total costs accounted for	$597,960