Process Job Costing and Equivalent Units of Production - Question On Bottom Bay

Question

Process Job Costing and Equivalent Units of Production - Question On Bottom
  
Bay Manufacturing produces paint. The company has two processes: mixing and packaging.  
The ingredients for the paint are mixed in large batches and then transferred to the packaging  
department, where one-gallon cans are filled, capped, labeled, and boxed.  
  
There was no work in process on February 1. The materials are all brought to the packaging job up front  
and charged to the job. Nothing is transferred to finished goods until the entire job is complete. The  
materials costs include the packaging, material, and the cost transferred from the mixing department.  
  
On February 2, 15,000 gallons (job 2-1) were transferred into the packaging department from the  
mixing department and completed on February 19.  
  
The costs incurred to complete job 2-1 in the packaging department are as follows:  
Materials   56,250
Labor   11,250
Overhead (applied based on direct labor hours)   7,500
  
On February 20, another 20,000 gallons (job 2-2) were transferred into the packaging department.  
Job 2-2 was 50% complete as to labor at the end of the month.  
  
The costs incurred (unit cost unchanged from job 2-1) to complete job 2-2 in the packaging  
department are as follows:  
Materials   75,000
Labor   15,000
Overhead (applied based on direct labor hours)   10,000
  
Please Compute the Following:

Part I
1. Compute the physical units of production.  
2. Compute the cost per unit to complete packaging for labor, materials, overhead, and total.  
3. Compute equivalent units and cost of work in process as of the end of February.  

Part II

4. Record journal entries for:  
a. the movement of materials from materials inventory to each job  
b. the allocation of payroll to each job  
c. the application of overhead to each job  
d. the movement of work in process to finished goods  

Explanation / Answer

Part-1)

1)The physical units of production = 15000 units* 100% + 20000 units* 0%

= 15000 units

.

2)Cost per unit to complete packaging for labor = 11250/15000

= 0.75

Cost per unit to complete packaging for materials = 56250/15000

= 3.75

Cost per unit to complete packaging for overhead = 7500/15000

= 0.50

Cost per unit to complete packaging for total = 0.75 + 3.75 + 0.50

= 5

..

..

3)Equivalent units as of the end of February for Material = 15000*100% + 20000*100%

= 35000 units

Equivalent units as of the end of February for Labor and Overhead = 15000*100% + 20000*50%

= 25000 units

..

..

..

..

4)a)Debit Job 2-1 = 56250

Credit Inventory Materials = 56250

..

Debit Job 2-2 = 75000

Credit Inventory Materials = 75000

..

b)Debit Job 2-1 = 11250

Credit Payroll Expenses-Labor = 11250

..

Debit Job 2-1 = 15000

Credit Payroll Expenses-Labor = 15000

..

c)Debit Job 2-1 = 7500
Credit Overhead = 7500

..

Debit Job 2-1 = 10000
Credit Overhead = 10000

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