Chapter 5, Problem 5.28AE

Complete the production cost report in first department (Learning Objective 3)

Woodson Dairy produces an organic butter that is sold by the pound. The production of the butter begins in the Churning Department.

Data for the Churning Department for January follows:

Units in beginning Work in Process (WIP) inventory	100,000 units
Units started during the month (all direct materials, including cream and salt, are added at the beginning of the churning process)	1,500,000 units
Units in ending Work in Process (WIP) inventory (40% of the way through the process)	200,000 units

Cost information is as follows:

WIP-Churning Department balance as of January 1:
Direct material cost included in beginning WIP balance	$110,000
Conversion cost included in beginning WIP balance	24,000
Beginning balance, WIP, January 1	$134,000
Manufacturing costs incurred during January:
Direct materials used	$1,730,000
Direct labor	10,000
WIP-Churning Department balance as of January 1:
Manufacturing overhead	558,000
Total manufacturing costs entered into production during January	$2,298,000

Requirements

1. 1. Prepare a production cost report for January for the Churning Department.
2. 2. How much did it cost to make one pound of butter in the Churning Department?
3. 3. How much did it cost to make a partially completed pound of butter in the Churning Department? Does this make sense? Why or why not?