Question 4 The White Corporation manufactures flavored milk by a series of three

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Question 4 The White Corporation manufactures flavored milk by a series of three processes: mixing (where all ingredients are added: plain milk, flavoring, sugar, preservatives), pasteurizing and then packaging As of December 1, 2011, 1,000 units of milk were in the Pasteurizing process (they are only 60% completed through the processing) $2,000 $1,000 S 500 Plain Millk Flavoring Sugar Preservatives S1,500 Conversion costs 780 Total $5,780 The following costs were charged to Work In Process- Pasteurizing during December: $19,500 Direct Materials (transferred from Mixing) Direct Labor Factory Overhead S 8,000 S 9,000 During December, 11,000 units of flavored milk were completed As of December 31, there were 5,000 units that were not completed and remained in the Pasteurizing Department; these 5,000 units were 60% completed. Determine (a) the cost of the Beginning WIP completed during December, (b) the cost of the units started and completed in December and (c) the cost of the units that remained in the Ending WIP as of December 31

Explanation / Answer

UNITS TO ACCOUNT FOR: Beginning Work in Process units 1,000 Add: Units Started in Process 15,000 Total Units to account for: 16,000 UNITS TO BE ACCOUNTED FOR: Units completed from Beginning WIP 1000 Units started and completed 10,000 Ending Work in Process 5,000 Total Units to be accounted for: 16,000 Equivalent Units: Transferred in cost Conversion % Completion Units % Completion Units Units completed from Beg. WIP 0% 0 40% 400 Units started and completed 100% 10,000 100% 10,000 Ending Work in Process 100% 5,000 60% 3,000 Total Equivalent units 15,000 13,400 TOTAL COST TO ACCOUNT FOR: COST PER EQUIVALENT UNIT: Ttransferred In Conversion Total cost added during the year 19,500 17,000 Equivalent Units 15,000 13,400 Cost per Equivalent unit 1.3 1.27 TOTAL COST ACCOUNTED FOR: Units Completed from Beginning WIP (1000 units) Equivalent unit Cost per EU Total Cost Beginning Cost 5780 Ttransferred in cost 0 1.3 0 Conversion Cost 400 1.27 508 Cost of units completed from Beg WIP 6288 Units started and Transferred out (10000 units) Equivalent unit Cost per EU Total Cost Transferred in cost 10,000 1.3 13000 Conversion Cost 10,000 1.27 12700 Total Cost of Units completed and transferred out: 25700 Ending Work in process (5,000 units) Equivalent unit Cost per EU Total Cost Transferred in cost 5,000 1.3 6500 Conversison Cost 3,000 1.27 3810 Total cost of Ending Work in process: 10,310 a. Cost of begiinning WIP completed: $ 6288 b. Cost of units started and completed during the year: $ 25,700 c. Cost of ending WIP inventory is $10310

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