Q3TI - Horngren'S Financial And Managerial Accounting

Question

The Blending Department for CenTex Paints started October with 1,000 gallons in process and started in production 9,500gallons. During the month, 7,000 gallons were completed and transferred to the next department. Ending work-in-process was3,500 gallons (100% complete with respect to direct materials and 30% complete for conversion costs). The department uses the

weighted-average method. The Blending Department incurred the following costs:

Beginning WIP-Direct materials cost	\(500
Beginning WIP-Conversion cost	1,210
Direct material added during the month	5,800
Conversion cost added during the month	5,230
Total	\)12,740

7. Prepare a production cost report for the Blending Department for the month of October.

Step-by-Step Solution

Answer

                                      Production cost report

Step 1: Production Cost Report

The company prepares a production cost report to show in detail the total cost, whether direct or indirect, incurred in manufacturing the products.

Step 2: Equivalent unit of production for direct material

$\begin{array}{rcl}\mathbf{EUP}& \mathbf{=}& \left(\mathbf{Completedunits}\mathbf{\times }\mathbf{Completion}\mathbf{\%}\right)\mathbf{+}\left(\mathbf{Inprocessunits}\mathbf{\times }\mathbf{Completion}\mathbf{\%}\right)\\ & \mathbf{=}& \left(\mathbf{7}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{100}\mathbf{\%}\right)\mathbf{+}\left(\mathbf{3}\mathbf{,}\mathbf{500}\mathbf{\times }\mathbf{100}\mathbf{\%}\right)\\ & \mathbf{=}& \mathbf{10}\mathbf{,}\mathbf{500}\end{array}$

Step 3: Equivalent unit of production for conversion cost

$\begin{array}{rcl}\mathbf{EUP}& \mathbf{=}& \left(\mathbf{Completedunits}\mathbf{\times }\mathbf{Completion}\mathbf{\%}\right)\mathbf{+}\left(\mathbf{Inprocessunits}\mathbf{\times }\mathbf{Completion}\mathbf{\%}\right)\\ & \mathbf{=}& \left(\mathbf{7}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{100}\mathbf{\%}\right)\mathbf{+}\left(\mathbf{3}\mathbf{,}\mathbf{500}\mathbf{\times }\mathbf{30}\mathbf{\%}\right)\\ & \mathbf{=}& \mathbf{8}\mathbf{,}\mathbf{050}\end{array}$