Problem 4-15A Comprehensive Problem-Weighted-Average Method [LO4-2, LO4-3, LO4-4

Question

Problem 4-15A Comprehensive Problem-Weighted-Average Method [LO4-2, LO4-3, LO4-4, LO4-5 Sunspot Beverages, Ltd, of Fiji makes blended tropical fruit drinks in two stages. Fruit juices are extracted from fresh fruits and then blended in the Blending Department. The blended juices are then bottled and packed for shipping in the Bottling Department The following information pertains to the operations of the Blending Department for June. Units version Work in process, beginning 120,000 Started into production Completed and transferred 182000 55% 50% 192,000 out Work in process, ending 130,000 60% 40% Work in process s 13,500 3,900 82,680 Cost added during June S 145,100 S Required: Assume that the company uses the weighted-average method 1. Determine the equivalent units for June for the Blending Department Materials Conversion Equivalent units of production 2 Compute the costs per equivalent unit for the Blending Department (Round your answers to 2 decimal places. Materials Conversion Cost per equivalent unit

Explanation / Answer

1)    Calculation of equivalent units of production

2) Calculation of cost per equivalent unit (Amounts in $)

3) Total cost of Ending WIP = Material cost+Conversion cost

= (Material Equiv units*Cost per EU)+(Conversion Equiv units*Cost per EU)

= (78,000*$0.61)+(52,000*$0.37) = $47,580+$19,240 = $66,820

Cost of units completed and transferred out = 182,000*($0.61+$0.37)

= 182,000*$0.98 = $178,360

4) Blending Department

Cost Reconciliation (Amounts in $)

Particulars Materials Conversion Units completed and transferred out (182,000*100%) = 182,000 (182,000*100%) = 182,000 Ending units for ending work in process (130,000*60%) = 78,000 (130,000*40%) = 52,000 Total Equivalent units of production 260,000 234,000

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