Chapter 20, Problem S20.6SE

Calculating conversion costs and unit cost

Russia Spring produces premium bottled water. Russia Spring purchases artesian water, stores the water in large tanks, and then runs the water through two processes: filtration and bottling.

During February, the filtration process incurred the following costs in processing 150,000 liters:

Wages of workers operating filtration equipment $ 19,950
Manufacturing overhead allocated to filtration Water 22,050
150,000

Russia Spring had no beginning Work-in-Process Inventory in the Filtration Department in February.

Requirements

1. Compute the February conversion costs in the Filtration Department.
2. The Filtration Department completely processed 150.000 liters in February. What was the filtration cost per liter?

Note- Short Exercise S20-5 must be completed before attempting Short Exercise S20-6.

S20-6 Computing EUP

Refer to Short Exercise S20-5. At Russia Spring, water is added at the beginning of the filtration process. Conversion costs are added evenly throughout the process. Now assume that in February, 80,000 liters were completed and transferred out of the Filtration Department into the Bottling Department. The 70,000 liters remaining in Filtration’s ending Work-in-Process Inventory were 80% of the way through the filtration process. Recall that Russia Spri9ng has no beginning inventories.

Compute the equivalent units of production for direct materials and conversion costs for the Filtration Department.