Waterfall Manufacturing produces a chemical pesticide and uses process costing.

Question

Waterfall Manufacturing produces a chemical pesticide and uses process costing. There are three processing departments—Mixing, Refining, and Packaging. On January 1, the first department—Mixing—had a zero beginning balance. During January, 43,000 gallons of chemicals were started into production. During the month, 34,000 gallons were completed, and 9,000 remained in process, partially completed. In the Mixing Department, all direct materials are added at the beginning of the production process, and conversion costs are applied evenly through the process. During January, the Mixing Department incurred $50,000 in direct materials costs and $211,200 in conversion costs. At the end of the month, the ending inventory in the Mixing Department was 60% complete with respect to conversion costs. The weighted-average method is used. The total cost of product in ending inventory was ________. (Round any intermediate calculations two decimal places, and your final answer to the nearest dollar.

Explanation / Answer

Calculation of total cost of Product Calculation of Equialent gallons Particulars Direct Material Conversion Cost Transferred out (A) 34000 34000 Gallons as at 31 January (B) 9000 9000 Percentage of completion (C) 100% 60% Equivalent Gallons as at 31 Jan (D=B×C) 9000 5400 Total equivalent gallons (A+D) 43000 39400 calculation of the cost per equivalent gallons. Particulars Direct Material Conversion Cost Total As at January 1 0 0 0 Added During the Month 50000 211200 261200 Total Cost to be accounted 50000 211200 261200 Total equivalent gallons 43000 39400 Cost Per Equivalent gallon 1.16 5.36 6.52 Total Cost for completed 34000 gallons = 221789 (34000*6.52) Calculation of cost of work in progress as on January 31 Particulars Direct Material Conversion Cost Gallons as on January 31 (A) 9000 9000 Cost Per Equivalent Unit (B) 1.16 5.36 Percentage of completion (C) 60% 60% Total cost (A×B×C) 6264 28944 Calculation of total cost of the Product Particulats Amount ($ ) Amount ($ ) Opening Direct Material 0 Add: Material used during the month 50000 Less: Ending Material cost 6264 Total Material Cost 43736 Opening inventory conversion cost 0 Add: Conversion cost incurred during the month 211200 Less: Ending inventory cost 28944 Total Conversion Cost 182256 Total cost of the product 225992

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