Chapter 18, Problem 24E

Shea Winery- in Pleasant Valley, New York, has two departments: Fermenting and Packaging. Direct materials are added at the beginning of the fermenting process (grapes) and at the end of the packaging process (bottles). Conversion costs are added evenly throughout each process. The company uses the weighted-average method. Data from the month of March for the Fermenting Department are as follows:

Requirements

1. 1. Compute the Fermenting Department’s equivalent units of production for direct materials and for conversion costs.
2. 2. Compute the total costs of the units (gallons)
3. a. completed and transferred out to the Packaging Department.
4. b. in the Fermenting Department ending Work-in-Process Inventory.

Refer to the data and your answers from Exercise El8-23.

Requirements

1. 1. Prepare the journal entries to record the assignment of direct materials and direct labor and the allocation of manufacturing overhead to the Fermenting Department. Assume labor costs are accrued and not yet paid. Also prepare the journal entry’

   to record the cost of the gallons completed and transferred out to the Packaging Department.

2. 2. Post the journal entries to the Work-in-Process Inventory—Fermenting T-account. W hat is the ending balance?
3. 3. What is the average cost per gallon transferred out of the Fermenting Department into the Packaging Department? Why would Shea Winery’s managers want to know this cost?