Reagan Products manufactures a silicone paste wax that goes through three proces

Question

Reagan Products manufactures a silicone paste wax that goes through three processing departments: cracking, blending, and packing. All raw materials are introduced at the start of work in the cracking department, with conversion costs being incurred uniformly in each department. The Work-in-Process T-account for the cracking department for July is:

Work-in-Process Inventory - Cracking Department

Balance, July 1 (35,000 lbs. 80% complete)      $63,700

Direct Materials (280,000 lbs.)                           397,600

Conversion Costs                                                189,700

Balance, July 1 (45,000 lbs. 66.7% complete)       ?

Costs Transferred to Blending Dept.                      ?

The beginning balance inventory consists of $43,400 in materials cost. Reagan uses the first-in, first-out (FIFO) method to account for its operations.

Required: (Round to 4 decimal places when computing)
(a) Compute the Cracking Department inventory balance on July 31?
(b) Compute the cost transferred to the Blending Dept. in July?

Explanation / Answer

1. Equivalent units of production
Materials: 14000+338000+76000= 428000
Conversion: 14000+338000+(.7*76000)= 405200

2. Cost per equivalent unit
Materials: 572100+134100=706200/428000= 1.65
Conversion: 29700+152640=182340/405200= .45

3. Cost of units completed and transferred out
Materials: 352000*1.65= 580800
Conversion: 352000*.45= 158400
Total: 739200

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

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