Question

Eire Products is a specialty lubricants company. The Lake Plant produces a single product in three departments: Filtering, Blending, and Packaging. Additional materials are added in the Blending Process when units are 50 to 55 percent complete with respect to conversion. Information for operations in June in the Blending process appear as follows.

Work in process on June 1 consisted of 9,000 barrels with the following costs.

	Amount			Degree of Completion
Filtering costs transferred in	$	10,540			100	%
Costs added in Blending
Direct materials	$	0			0	%
Conversion costs		18,335			30	%
	$	18,335
Work in process June 1	$	28,875

During June, 116,000 barrels were transferred in from Filtering at a cost of $151,960. The following costs were added in Blending in June.

Direct materials	$	387,500
Conversion costs		538,265
Total costs added	$	925,765

Blending finished 115,000 barrels in June and transferred them to Packaging. At the end of June, there were 10,000 barrels in work in process inventory. The units were 60 percent complete with respect to conversion costs.

The Blending Department uses the weighted-average method of process costing. The Filtering Department at Eire uses the FIFO method of process costing. The cost analyst in Blending has learned that if the Filtering Department at Eire had used the weighted average method, the amount of costs transferred in from Filtering would have been $10,340 in the beginning work in process and $149,660 for the amount transferred in this month.

Required:

Prepare a production cost report for June for the Blending Department. (Round "Cost per equivalent unit" to 2 decimal places.)

Answer 1

Blending finished 115,000 barrels in June and transferred them to Packaging. At the end of June, there were 10,000 barrels in work in process inventory.

	Amount			Degree of Completion
Filtering costs transferred in	$	160,000			100	%
Costs added in Blending($10,340+$149,660)
Direct materials	$	387,500			100	%
Conversion costs($18,335+$538,265)	$	556,600			60	%
Total production cost till date	$	1,104,100

Therefore the production cost will be attributable for 115,000 full units and equivalent units of 10,000 for conversion cost

i.e 115,000+6000 units= 121,000 units

Particulars	Amount	units	amount per unit
Filtering costs transferred in Costs added in Blending($10,340+$149,660)- 100%	160,000	125,000	1.28
Direct materials- 100%	387,500	125,000	3.1
Conversion costs($18,335+$538,265)- 60% in respect to 10000 units	556,600	121,000	4.6
Total production cost	1104100		8.98

production cost report for June for the Blending Department.

cost per unit is 8.98