Question

Brian Canning Co., which sells canned corn, uses an operation costing system. Cans of corn are classified as either sweet or regular, depending on the type of corn used. Both types of corn go through the separating and cleaning operations, but only regular corn goes through the creaming operation. During January, two batches of corn were canned from start to finish. Batch X consisted of 800 pounds of sweet corn, and Batch Y consisted of 700 pounds of regular corn. The company had no beginning or ending Work-in- Process Inventory. The following cost information is for the month of January 48 Batch Cost Batch Size e00 lbs oints x$5,200 Rav sveet corn Raw regular corn Separating department costs Cleaning department costs Creaming department costs Y 2,450 700 1bs 1,500 900 210 Includes $300 for cream. Required: 1. Compute the unit cost for sweet corn and regular corn 2. Record appropriate journal entries

Answer 1

1)Computation of the unit costs for sweet corn & regular corn
Raw regular corn = 2450/700lbs = 3.50
Total pound of separating & cleaning deptt = 800+700 =1500
Total pound for creaming deptt = 700
separating deptt = 1500/1500 = 1
Cleaning department = 900/1500lbs = 0.60 lb
Creaming department = 210/700lbs = 0.30 lb
Total product cost per pound
sweet corn = 6.50+1+0.60 = 8.10
regular corn = 3.50+1+0.60+0.30 = 5.40
Journal entries
a	Particulars			Debit	Credit
	WIP inventory separation deptt (5200+2450-300)			$ 7,350.00
	Direct material inventory				$ 7,350.00
	(to record requisition of raw corn)
b	WIP Inventory separation deptt 1*1500			$ 1,500.00
	conversion cost applied				$ 1,500.00
	(to record conversion cost to separation deptt)
c	WIP inventory cleaning deptt (7350+1500)			$ 8,850.00
	WIP inventory separation deptt				$ 8,850.00
	(to record transfer of both types of corn)
d	WIP Inventory cleaning deptt (0.60*1500)			$     900.00
	Conversion cost applied				$     900.00
	(to record conversion cost to the cleaning deptt)
e	WIP Inventory creaming deptt2450-300+(1*700)+(0.60*700)			$ 3,270.00
	Finished goods inventory 5200+(1*800)+(0.60*800)			$ 6,480.00
	WIP inventory cleaning deptt				$ 9,750.00
	(to record transfer the regular corn to the creaming deptt)
f	WIP inventory creaming deptt			$     510.00
	Direct material inventory				$     300.00
	Conversion cost applied 0.30*700				$     210.00
	(to record cream cost & conversion cost )
g	Finished goods inventory( 3270+510)			$ 3,780.00
	WIP inventory creaming department				$ 3,780.00
	(to record transfer the creamed corn to finished goods)