Sister Company makes super-premium cake mixes that go through two processing departments, Blending and Packaging. The following activity was recorded in the Blending Department during July: Production data: Units in process, July 1 (materials 100% complete; conversion 50% complete). . 15,000 Units started into production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190,000 Units in process, July 31 (materials 100% complete; conversion 40% complete). . 25,000 Cost data: Work in process inventory, July 1: Materials cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,500 Conversion cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,900 Cost added during the month: Materials cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169,400 . Conversion cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . …. 284,200 All materials are added at the beginning of work in the Blending Department. The company uses the FIFO method in its process costing system. Required: Determine the equivalent units for July for the Blending Department. Compute the costs per equivalent unit for July for the Blending Department. Determine the total cost of ending work in process inventory and the total cost of units transferred to the next process for the Blending Department in July. Prepare a cost reconciliation report for the Blending Department for July.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Sister Company makes super-premium cake mixes that go through two processing departments, Blending and Packaging. The following activity was recorded in the Blending Department during July:
Production data:
Units in process, July 1 (materials 100% complete; conversion 50% complete). . 15,000
Units started into production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190,000
Units in process, July 31 (materials 100% complete; conversion 40% complete). . 25,000
Cost data:
Work in process inventory, July 1:
Materials cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,500
Conversion cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,900
Cost added during the month:
Materials cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169,400 . Conversion cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . …. 284,200
All materials are added at the beginning of work in the Blending Department. The company uses the FIFO method in its
Required:
- Determine the equivalent units for July for the Blending Department.
- Compute the costs per equivalent unit for July for the Blending Department.
- Determine the total cost of ending work in process inventory and the total cost of units
transferred to the next process for the Blending Department in July.
- Prepare a cost reconciliation report for the Blending Department for July.
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