Question

Question 1 (10 marks) A newly established brewing company in Sydney, Cool Brew Ltd, produces its main product, Cool Bay Draught, in 300 militer bottles There are two production departments: Mixing and Bottling. The manufacturing costs for each department during March 2013 were tabulated below Mixing Direct materials Direct labour Manufacturing overhead S 113 000 15 000 32 000 Bottling 17000 6 000 9 000 In March 2013, Cool Brew Ltd produced 48 000 litres of Cool Bay Draught that was bottled into 160 000 bottles. There were no beginning and ending work-in-process inventories. Required (a) Calculate the cost per bottle for Cool Bay Draught:(4 marks) (b) Prepare the joumal entries to record the production costs for March 2013, assuming that the costs of Mixing and Botting Departments are charged to their respective work-in- process inventory accounts. (6 marks)

Answer 1

	Total cost of mixing department	160000	(113000+15000+32000)
	Total cost of bottling department	32000	(17000+6000+9000)
	Total cost of producing 160,000 bottles	192000
a	Cost per bottle	$1.20	Per bottle	(192000/160000)
b
Event	General Journal	Debit	Credit
	Work in process - Mixing	160000
	Material		113000
	Labor		15000
	Manufacturing overhead		32000
	(To record work in process)
	Work in process - Bottling	32000
	Material		17000
	Labor		6000
	Manufacturing overhead		9000
	(To record work in process)