Chapter 5, Problem 5.18SE

Compute equivalent units in second department (Learning Objectives 2 & 5)

Refer to the Arctic Springs Bottling Department Data Set.

1. 1. Draw a time line.
2. 2. Complete the first two steps of the process costing procedure for the Bottling Department: summarize the physical flow of units and then compute the equivalent units of direct materials and conversion costs.

Arctic Springs Data Set: Bottling Department

Arctic Springs produces premium bottled water. The preceding Short Exercises considered the first process in bottling premium water— Filtration. We now consider Arctic Springs’ second process—Bottling. In the Bottling Department, workers bottle the filtered water and pack the bottles into boxes. Conversion costs are incurred evenly throughout the Bottling process, but packaging materials are not added until the end of the process.

December data from the Bottling Department follow:

Beginning work in process inventory (45% of the way through the process)	9,000 liters
Transferred in from Filtration	160,000 liters
Completed and transferred out to Finished Goods Inventory in December	147,000 liters
Ending work in process inventory (85% of the way through the bottling process)	22,000 liters

The Filtration Department completed and transferred out 160,000 liters at a total cost of $148,000.