Problem D A bottling company bottles soft drinks using a process cost system. Fo

Question

Problem D A bottling company bottles soft drinks using a process cost system. Following are cost and production data for the mixing department for June: Work in Process, June 1: 56,000 units (65% complete for materials, 80% complete for conversion) Direct material cost $11,620 Conversion cost $16,240 Added during June: 133,000 units Direct material cost $29,960 Conversion cost $41,720 Work in Process, June 30: 63,000 units (100% complete for materials, 30% complete for conversion) Prepare a production cost report for the month ended June 30 using the weighted average method. Provide the journal entry to record transferring completed units to finished goods. Critical Thinking: Explain why we use equivalent units in Process Costing.

Explanation / Answer

Cost charged too production Cost of beginning goods in process Direct Material 11620 Conversion Cost 16240 27860 (11620+16240) Cost incurred this period Direct Material      29,960 Conversion Cost      41,720              71,680 (29960+41720) Total Cost to account for 99540 (27860+71680) Unit Cost informtion Physical flow of units Units in beginning WIP      56,000 Units completed in June                     126,000 (189000-63000) +Units started in June 133000 +Units in Ending WIP 63000 Total units to be accounted for    189,000 Total Units accounted for                     189,000 Equivalent units of Production DM Conv Units completed and trasnfered out 100%                     126,000             126,000 Units of ending goods in process Units % Complete Direct Materials 63000 100% 63000 Conversioncost 63000 30%                18,900 Total units of production                     189,000             144,900 (126000+18900) Cost per Equiv unit of production DM Conv Cost of beginning WIP 11620 16240 Costs incurred this period      29,960                        41,720 Total Cost 41580 57960 Divide by total equiv units    189,000                     144,900 Cost per Equiv unit of production           0.22                            0.40 Cost Assignment and rEconciliation Cost transferd out Equiv units Cost per unit Direct Material    126,000                  0.22 $                   27,720 Conversion    126,000                  0.40 $                   50,400 $           78,120 Costs of ending WIP Equiv units Cost per unit Direct Material 63000                  0.22 $                   13,860 Conversion      18,900                  0.40 $                      7,560 $           21,420 Total cost accounted for $           99,540 Journal Entry Finished Goods Debit $ 78,120 Work in Progress Credit $         78,120 Critical Thinking It is used to assign cost to each unit. Since in process costing there are some wip at at end and these have different completion ratio in terms od material & conversion. Equivalent units concept is used to find the cost of each units completed and transfeed out.

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.