Venus Chocolate Company processes chocolate into candy bars. The process begins

Question

Venus Chocolate Company processes chocolate into candy bars. The process begins by placing direct materials (raw chocolate, milk, and sugar) into the Blending Department. All materials are placed into production at the beginning of the blending process. After blending, the milk chocolate is then transferred to the Molding Department, where the milk chocolate is formed into candy bars. The following is a partial work in process account of the Blending Department at March 31, 2016:

Required:

1. Prepare a cost of production report, and identify the missing amounts for Work in Process—Blending Department. If an amount is zero, enter "0". When computing cost per equivalent units, round to two decimal places.

2. Assuming that the March 1 work in process inventory includes $7,790 of direct materials, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between February and March. If required, round your answers to the nearest cent.

ACCOUNT Work in Process—Blending Department ACCOUNT NO. Date Item Debit Credit Balance Debit Credit Mar. 1 Bal., 4,100 units, 4/5 completed 9,758 31 Direct materials, 164,000 units 328,000 337,758 31 Direct labor 65,700 403,458 31 Factory overhead 16,400 419,858 31 Goods transferred, 165,000 units ? 31 Bal., ? units, 4/5 completed ?

Explanation / Answer

Solution 1:

Solution 2:

Cost per equivalant unit of direct material in february = $7,790 / 4100 = $1.90

Cost per equivalant unit of conversion in february = ($9,758 - $7,790) / 3280 = $0.60

Change in direct materials cost per equivalent unit from february to march = $2 - $1.90 = $0.10 Increase

Change in conversion cost per equivalent unit = $0.50 - $0.60 = $0.10 decrease

Venus Choclate Company Blending Department Computation of Equivalent unit (FIFO) Particulars Physical units Material Conversion Units to be accounted for: Beginning WIP Inventory 4100 Units started this period 164000 Total unit to be accounted for 168100 Units Accounted for: Units completed and transferred out From beginning inventory
Material - 0%
Conversion - 1/5 4100 0 820 Started and completed currently 160900 160900 160900 Units in ending WIP
Material - 100%
Conversion - 4/5 3100 3100 2480 Total units accounted for 168100 164000 164200

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