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Chapter 18: Q16SE (page 1010)

Refer to Short Exercise S18A-15. At Spring Fresh, water is added at the beginning of the filtration process. Conversion costs are added evenly throughout the process. Now assume that in February, 130,000 liters were completed and transferred out of the Filtration Department into the Bottling Department. The 70,000 liters remaining in Filtration鈥檚 ending Work-in-Process Inventory were 80% of the way through the filtration process. Recall that Spring Fresh has no beginning inventories.

Compute the equivalent units of production for direct materials and conversion

costs for the Filtration Department using the FIFO method.

Short Answer

Expert verified

The equivalent unit of production for direct material is 200,000 liters, and for conversion costs, 186,000 liters.

Step by step solution

01

Step-by-Step Solution:Step 1: Equivalent Unit of Production

The equivalent units of production denote the amount of work done on the partially completed units at the end of the reporting period. It represents units in terms of fully completed units.

02

Equivalent unit of production (EUP) for direct material

EUPfordirectmaterial=(Completedunits脳Completion%)+(WIPunits脳Completion%)=(130,000脳100%)+(70,000脳100%)=200,000

03

Equivalent unit of production for conversion cost

EUPforConversioncost=(Completedunits脳Completion%)+(WIPunits脳Completion%)=(130,000脳100%)+(70,000脳80%)=186,000

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Most popular questions from this chapter

Collins Company has the following data for the Assembly Department for August:

Unit in process at the beginning of august

900

Units started in august

2,000

Units completed and transferred

2,100

Units in process at the end of august

800

Conversion costs are added evenly throughout the process. The company uses the weighted-average method. Compute the equivalent units of production for direct materials and conversion costs for each independent scenario:

1. Units in process at the end of August are 20% complete; materials are added at the beginning of the process.

2. Units in process at the end of August are 80% complete; materials are added at the beginning of the process.

3. Units in process at the end of August are 20% complete; materials are added at the end of the process.

4. Units in process at the end of August are 80% complete; materials are added at the halfway point.

Question: The Mixing Department of Complete Foods had 62,000 units to account for in October. Of the 62,000 units, 38,000 units were completed and transferred to the next department, and 24,000 units were 20% complete. All of the materials are added at the beginning of the process. Conversion costs are added evenly throughout the mixing process and the company uses the weighted-average method.

Compute the total equivalent units of production for direct materials and

conversion costs for October.

Question: Evergreen Orange manufactures orange juice. Last month鈥檚 total manufacturing costs for the Tampa operation included:

Direct materials

$450,000

Direct labor

32,000

Manufacturing overhead

125,000

What was the conversion cost for Evergreen Orange鈥檚 Tampa operation last month?

Question: Castillo Company has three departments: Mixing, Bottling, and Packaging. At the end of the month, the production cost reports for the departments show the costs of the products completed and transferred were \(75,000 from Mixing to Bottling, \)50,000 from Bottling to Packaging, and $65,000 from Packaging to Finished Goods Inventory. Prepare the journal entries for the transfer of the costs.

Miller Company sells several products. Sales reports show that the sales volume of its most popular product has increased the past three quarters while overall profits have decreased. How might production cost reports assist management in making decisions about this product?
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