Question

1. Women's Entertainment television network features a new TV show, "The Cupcake Girls". This new series follows best friends and business partners Heather and Lori in their hectic and entertaining journey to build a cupcake empire. In addition to the TV show, Heather and Lori bake cupcakes for retail customers for special occasions. This side of their business, the retail bakery, consists of two departments: the baking department and the packaging department. Within the baking department, the baking supplies (e.g., flour, sugar, eggs) are added at the beginning of the period while the decorating supplies (e.g., icing, sprinkles) are added uniformly throughout the period. Within the packaging department, the costs of the packaging materials are added at the beginning of the period. The following information relates to February, an especially busy month because of Valentine's Day, for the baking department: Baking Beginning Inventories: 2001 Physical Units 300 units Costs: Baking Supplies Decorating Supplies Conversion Costs $540 $240 $630 Current Production: Transferred Out Ending Inventory 3,800 units 80 units Costs: Baking Supplies Decorating Supplies Conversion Costs $5,600 $1,200 $8,000 2. Percentage of Completion: Beginning inventory Ending inventory 80% 40% 0) Prepare a production report for the baking department using the weighted average method. Alternatively, calculate the dollar value allocated to the units transferred e baking department in February, and the dollar-value of the units that remain in Work in Process at the end of February. For the packaging department, what will be the number of units started into production, and what will be the transferred in cost?

Answer 1

(i)

		Baking Supplies	Decorating Supplies	Conversion Costs
Units to account for
Beginning Work in process	300
Units started	3800
Total Units to account for	4100
Units accounted for
Units transferred	4020	4020	4020	4020
Equivalent units in ending WIP	80	80	32	32
Total units accounted for	4100
Equivalent units of production		4100	4052	4052
	Baking Supplies	Decorating Supplies	Conversion Costs
Cost of beginning work in process	$           540	$              240	$              630
Cost added during the production	$       5,600	$           1,200	$          8,000
Total Cost	$       6,140	$           1,440	$          8,630
Equivalent units of production	4100	4052	4052
Cost per Equivalent unit	$          1.50	$             0.36	$             2.13
	Baking Supplies	Decorating Supplies	Conversion Costs	Total
Ending Work in process inventory
Equivalent units	80	32	32
Cost per Equivalent unit	$          1.50	$             0.36	$             2.13
Cost of Ending Work in process inventory	$           120	$                 11	$                68	$             199
Units completed and transferred out
Units transferred	4020	4020	4020
Cost per Equivalent unit	$          1.50	$             0.36	$             2.13
Cost of Units transferred	$       6,020	$           1,429	$          8,562	$       16,011
Costs to be accounted for
Cost of beginning work in process	$       1,410
Cost added during production	$     14,800
Total Costs to be accounted for	$     16,210
Costs accounted for as follows
Cost of Ending work in process	$           199
Cost of Units transferred	$     16,011
Total Costs accounted for	$     16,210

(ii) For packaging department, number of units started will be 4020 units and Cost transferred in will be $16011