Selzik Company makes super-premium cake mixes that go through two processing dep

Question

Selzik Company makes super-premium cake mixes that go through two processing departments—Blending and Packaging. The following activity was recorded in the Blending Department during July: Production data: Units in process, July 1 (materials 100% complete; conversion 30% complete) 10,000 Units started into production 170,000 Units in process, July 31 (materials 100% complete; conversion 40% complete) 20,000 Cost data: Work in process inventory, July 1: Materials cost $ 8,500 Conversion cost $ 4,900 Cost added during the month: Materials cost $ 139,400 Conversion cost $ 244,200 All materials are added at the beginning of work in the Blending Department. The company uses the FIFO method in its process costing system. Required: 1. Calculate the Blending Department's equivalent units of production for materials and conversion for July. 2. Calculate the Blending Department's cost per equivalent unit for materials and conversion for July. 3. Calculate the Blending Department's cost of ending work in process inventory for materials, conversion, and in total for July. 4. Calculate the Blending Department's cost of units transferred out to the next department for materials, conversion, and in total for July. 5. Prepare a cost reconciliation report for the Blending Department for July.

Explanation / Answer

Equivalent units of production (EUP)­ FIFO method Units % Materials EUP­ Materials % Conversion Conversion Beginning WIP 10000 0.00% 0 70.00% 7000 Units Started and completed 150000 100.00% 150000 100.00% 150000 Ending goods in process ­ units 20000 100.00% 20000 40.00% 8000 Equivalent units of production 180000 170000 165000 Cost Per Equivalent unit of Production Direct Material Conversion Costs incurred this period 139400 244200 Total Costs Costs 139400 Costs 244200 Equivalent Unit of Production 170000 165000 Cost Per Equivalent unit of Production 0.82 1.48 Cost of Units Transferred out EUP Cost Per EUP Total Cost Beginning WIP 13400 Cost incured for processing beginning WIP Direct Material 0.00 0.82 0 Conversion 7,000 1.48 10360 Direct Material 150000 0.82 123,000.00 Conversion 150000 1.48 222,000.00 Total Cost Transferred out 368760 Cost of Ending Work in Progress EUP Cost Per EUP Total Cost Direct Material 20000 0.82 16,400.00 Conversion 8000 1.48 11,840.00 Total Cost of Ending Work in Progress 28,240.00 Cost Reconciliation Costs to be accounted for: Cost of beginning work in process inventory 13,400.00 Costs added to production during the period 383,600.00 Total cost to be accounted for 397,000.00 Total Cost accounted for Total Cost Transferred out 368,760.00 Total Cost of Ending Work in Progress 28,240.00 Total Cost accounted for 397,000.00

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