Rich company produces a variety of stationery products. One product, sealing wax sticks, passes through two processes: blending and molding. The weighted average method is used to account for the cost of production. Two ingredients, paraffin and pigment are added at the beginning of the process and heated and mixed for several hours. After blending, the resulting product is sent to the Molding department, where it is poured into molds and cooled. The following information relates to the blending process for November: a) Work in process, November 1, had 20,000 pounds, 20% complete with respect to conversion costs. Costs associated with partially completed units with: Paraffin : $ 120,000 Pigment : $ 100,000 Direct Labour : $ 30,000 Overhead applied : $ 10,000 b) Work in process, August 31, had 30,000 pounds, 70% complete with respect to conversion costs. c) Units completed and transferred out totalled 500,000 pounds. Costs added during the month were: Paraffin : $ 3,060,000 Pigment : $ 2,550,000 Direct Labour : $ 3,877,500 Over applied : $ 1,292,500 Required Prepare for the following (a) unit completed (b) an equivalent unit schedule with cost categories for paraffin, pigment, and conversion costs. Calculate the unit cost for each cost category. Compute the cost of ending work in process and the cost of goods transferred out.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Rich company produces a variety of stationery products. One product, sealing wax sticks, passes through two processes: blending and molding. The weighted average method is used to account for the cost of production. Two ingredients, paraffin and pigment are added at the beginning of the process and heated and mixed for several hours. After blending, the resulting product is sent to the Molding department, where it is poured into molds and cooled. The following information relates to the blending process for November:

a) Work in process, November 1, had 20,000 pounds, 20% complete with respect to conversion costs. Costs associated with partially completed units with:

Paraffin : $ 120,000

Pigment : $ 100,000

Direct Labour : $ 30,000

Overhead applied : $ 10,000

b) Work in process, August 31, had 30,000 pounds, 70% complete with respect to conversion costs.
c) Units completed and transferred out totalled 500,000 pounds. Costs added during the month were:

Paraffin : $ 3,060,000

Pigment : $ 2,550,000

Direct Labour : $ 3,877,500

Over applied : $ 1,292,500

Required

Prepare for the following (a) unit completed (b) an equivalent unit schedule with cost categories for paraffin, pigment, and conversion costs.
Calculate the unit cost for each cost category.
Compute the cost of ending work in process and the cost of goods transferred out.
Prepare a cost reconciliation.

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