Answers
Answers for questions 3 through 5:-
3. Work in process inventory, Sept 1 - 12000 units.
Cost of materials - $ 38400.
So, cost of materials per unit = 38400 / 12000 = $ 3.20.
> Units started into production during Sept - 60000 units
Cost of materials added during Sept - $ 194400.
Since Material percent completed is 100%, all the materials are utilized.
So, cost of materials per unit = 194400 / 60000 = $ 3.24.
> If average cost of materials is to be calculated for Sept:-
Cost of materials for 12000 units @ $ 3.20 = 38400.
Cost of materials for 52000 units (64000 completed - 12000 opening WIP) @ $3.24 = 168480.
Total material cost for 64000 completed units = 38400+168480 = 206880.
So, average cost per unit = 206880 / 64000 = $ 3.2325.
4. Labor and Overheads:-
Completed units in Work in process inventory, Sept 1 = 20% of 12000 = 2400 units.
Units completed during the month = (80% of 12000) + (100% of 52000) + (60% of 8000)
= 9600 + 52000 + 4800
= 66400 units.
Total cost of labor and overheads added during the month = $ 53120.
So, Cost of labor and overheads per unit = 53120 / 66400 = $ 0.80.
5. Material cost per unit = $ 3.30
Conversion cost per unit = $ 0.85
Total cost of materials used during the month = 52000 * 3.30 = $ 171600.
Total cost of materials for completed 64000 units = 171600 + 38400 = $ 210000.
Total conversion cost incurred during the month (for completed units)
= 0.85 * ( (80% of 12000) + (100% of 52000))
= 0.85 * 61600 =$ 52360
Total conversion cost for completed 64000 units = 52360 + 1800 = $ 54160
Therefore, the total cost of completing 64000 units by Blending department = 210000 + 54160 = $ 264160.
So, the journal entry:
d. debit WIP-Bottling $ 264160; credit WIP-Blending $ 264160.
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