Myer’s Treats makes institutional cakes. Finished cakes must pass through two de

Question

Myer’s Treats makes institutional cakes. Finished cakes must pass through two departments: Mixing and Baking. Vats of cake batter are processed in the Mixing Department and then transferred to the Baking Department, where individual cakes are baked, cooled, and frosted. There were 500 gallons of partially mixed batter in the Mixing Department’s inventory on August 1. The batter was 100 percent complete with respect to direct materials, but only 30 percent complete with respect to conversion. Manufacturing costs assigned to the inventory carried forward from July totaled $1,800. During August, the Mixing Department started 11,500 new gallons of batter. August direct materials costs in the Mixing Department totaled $34,500, and conversion costs totaled $22,800. Ending inventory on August 31 consisted of 600 partially mixed gallons of batter. These units were 100 percent complete with respect to direct materials, but only 25 percent complete with respect to conversion.
Myer’s Treats uses one gallon of mix for each cake produced by the Baking Department. On August 1, the Baking Department had 600 cakes in process. These units were 100 percent complete with respect to batter transferred in from the Mixing Department during July, but only 80 percent complete with respect to direct (frosting) materials, and 40 percent complete with respect to conversion. Costs applied to these units carried forward from July totaled $5,880. Costs incurred by the Baking Department during August included $34,185 of direct materials and $67,860 of conversion. The ending inventory in the Baking Department on August 31 consisted of 500 cakes in process. These units were 100 percent complete with respect to batter transferred in from the Mixing Department, but only 75 percent complete with respect to direct (frosting) materials, and 10 percent complete with respect to conversion.

a. Compute how many cakes were started in the Baking Department during August.

b. Prepare a schedule showing: (1) cakes transferred out of the Baking Department in August, and (2) cakes started and completed by the Baking Department in August.

c. Compute the equivalent units of input resources for the Baking Department in August.

d. Compute the cost per equivalent unit of input resource for the Baking Department in August.

e. Prepare the summary journal entry required to transfer the cost of baked cakes from the Baking Department's Work in Process Inventory to the company's Finished Goods Inventory in August.

f. Compute the total cost assigned to the Baking Department's ending inventory in process on August 31.

Explanation / Answer

Cost of Production Report - Mixing Department For the Month ended August 31 Particulars Equivalent Units Physical Units (In Gallons) Materials Conversion Costs Units Information Units Charged to Production Work in process - Beginning                                           500 Started into production                                     11,500 Total units                                     12,000 Units accounted for Goods Units Completed & transferred out: From Beginning WIP                                           500                                            -                                    350 (0% materials, 70% conversion costs) . Started & Completed (11,400 - 500)                                     10,900                                   10,900                            10,900 Work in process, Ending                                           600                                         600                                  150 (100% materials, 25% conversion costs) Equivalent units accounted for                                     12,000                                   11,500                            11,400 Materials Conversion Costs Total Total Cost to Account for: WIP, Beginning                                              -                                              -                                 1,800 Cost added in current period                                     34,500                                   22,800                            57,300 Total cost to be account for                                     34,500                                   22,800                            59,100 Cost added in current period                                     34,500                                   22,800                            57,300 Equivalent Units of work done in current Period                                     11,500                                   11,400 Cost per Equivalent Unit                                          3.00                                        2.00                                 5.00 Assignment of Costs: Goods Units and Completed out (11,400 Gallons) WIP, Beginning - 500 Gallons                                              -                                              -                                 1,800 Cost added to Beg. WIP in Current period                                              -                                           700                                  700 (350 gallons X $2) Total of Beginning Inventory                                              -                                           700                               2,500 Started and completed - 10,900 Galons                                     32,700                                   21,800                            54,500 (10,900 gallons X $3) (10,900 gallons X $2) Total Cost of good units completed & transferred out                                     32,700                                   22,500                            57,000 WIP, Ending - 600 Gallons                                       1,800                                         300                               2,100 (600 gallons X $3) (150 gallons X $2) Total Cost accounted For                                     34,500                                   22,800                            59,100 Cost of Production Report - Baking Department For the Month ended August 31 Particulars Physical Units Equivalent Units Batter Mix Materials Conversion Costs Units Information Units Charged to Production Work in process - Beginning                                           600 Started into production                                     11,400 Total units                                     12,000 Units accounted for Goods Units Completed & transferred out: From Beginning WIP                                           600                                            -                                    120                             360 (0% Batter Mix, 20% materials, 60% conversion costs) . Started & Completed (11,500 - 600)                                     10,900                                   10,900                            10,900                       10,900 Work in process, Ending                                           500                                         500                                  375                                50 (100% Batter Mix, 75% materials, 10% conversion costs) Equivalent units accounted for                                     12,000                                   11,400                            11,395                       11,310 Batter Mix Materials Conversion Costs Total Total Cost to Account for: WIP, Beginning                                              -                                              -                      5,880.00 Cost added in current period                               57,000.00                             34,185.00                      67,860.00               159,045.00 Total cost to be account for                               57,000.00                             34,185.00                      67,860.00               164,925.00 Cost added in current period                               57,000.00                             34,185.00                      67,860.00               159,045.00 Equivalent Units of work done in current Period                               11,400.00                             11,395.00                      11,310.00 Cost per Equivalent Unit                                          5.00                                        3.00                                 6.00                          14.00 Assignment of Costs: Goods Units and Completed out (11,500 Cakes) WIP, Beginning - 600 Cakes                                              -                                              -                                        -                      5,880.00 Cost added to Beg. WIP in Current period                                              -                                     360.00                         2,160.00                    2,520.00 (120 Cakes X $3) (360 Cakes X $6) Total of Beginning Inventory                                              -                                     360.00                         2,160.00                    8,400.00 Started and completed - 10,900 Cakes                               54,500.00                             32,700.00                      65,400.00               152,600.00 (10,900 Cakes X $5) (10,900 Cakes X $3) (10,900 Cakes X $6) Total Cost of good units completed & transferred out                               54,500.00                             33,060.00                      67,560.00               161,000.00 WIP, Ending - 500 Cakes                                 2,500.00                               1,125.00                            300.00                    3,925.00 (500 Cakes X $5) (375 Cakes X $3) (50 Cakes X $6) Total Cost accounted For                               57,000.00                             34,185.00                      67,860.00               164,925.00 Answer 1. Cakes were started in the Baking Department during August                               11,400.00 Answer 2 - a & b. Units Charged to Production Work in process - Beginning                                           600 Started into production                                     11,400 Total units                                     12,000 Units accounted for Goods Units Completed & transferred out: From Beginning WIP                                           600 (0% Batter Mix, 20% materials, 60% conversion costs) . Started & Completed (11,500 - 600)                                     10,900 Work in process, Ending                                           500 (100% Batter Mix, 75% materials, 10% conversion costs) Equivalent units accounted for                                     12,000 Answer 2 - c. Batter Mix Materials Conversion Costs Equivalent Units                                     11,400                                   11,395                            11,310 Answer 2 - d. Batter Mix Materials Conversion Costs Cost per Equivalent Unit                                          5.00                                        3.00                                 6.00 Answer 2-e. Journal Entry Date Particulars Dr. Amt. Cr. Amt. a1 Finsihed Goods Inventory        161,000.00    WIP - Baking Department        161,000.00 (Record the fin. inventory produced) Answer 2-f Work in Process - Baking Department - Aug 31            3,925.00

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