Apply the Concepts: Transferred-in Materials Scenario: Dormir produces a liquid

Question

Apply the Concepts: Transferred-in Materials

Scenario: Dormir produces a liquid herbal sleep remedy. Production begins in the Blending Department. After blending is completed, output (measured in ounces) is transferred to the Bottling Department. In the bottling department, the liquid is strained and then (the very last step) is placed in 8 ounce bottles. During the month of June, the Blending Department transferred out 36,000 ounces of liquid at a cost of $7,920. The Bottling Department had 80 bottles in process at the end of May, 75 percent complete with respect to conversion costs. At the end of June, Bottling had 100 bottles in process, 50 percent complete with respect to conversion cost.

Complete the following physical flow schedule:

The table below illustrates the adjustment for calculating equivalent units for departments that receive transferred-in goods for either FIFO or weighted average. Complete the table, rounding to the nearest whole number. If an amount box does not require an entry, leave it blank or enter "0".

Assuming the cost of transferred-in materials in beginning work in process is $110, calculate the unit cost for transferred in materials per bottle for the month of June (round to the nearest cent):

Weighted average ?

Please fill in question marks for FIFO and Weighted average

Units to Account for: Units in BWIP    80 Units started 45     Total units to account for 4580 Units accounted for:            Units Completed:             From: BWIP 80             Started and completed 4400 4480         Units in EWIP 100         Total units accounted for 4580

Explanation / Answer

Units to Account for: Units in BWIP 80 Units started (3600/8) 4500 Total units to account for 4580 Units accounted for:    Units Completed: From BWIP 80 Started and completed 4400 Units in EWIP 100 Total units accounted for 4580 FIFO WEIGHTED AVERAGE Transferred-in Materials Direct Conversion Transferred-in Materials Direct Conversion Materials Materials (bottles) (bottles) Units Completed 0 0 0 4480 4480 4480 Units Started and Completed 4400 4400 4400 0 0 Units in BWIP × Fraction to Complete 0 0 60 0 0 0 Units in EWIP × Fraction Complete 100 100 50 100 100 50 Equivalent Units 4500 4500 4510 4580 4580 4530 Cost per equivalent unit for Transferred in materials: FIFO = 7920/4500 = $1.76 Weighted average = (7920+110)/4580 = $1.75

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