Posted by amy on Friday, November 7, 2008 at 8:51am.
CAN SOMEONE TELL ME HOW MATERIAL AND CONVERSION IS BROKEN UP IN THIS PROBLEM thanks so much
PROBLEM 1
Estrella Company, a company that mass produces a widely used pain medication, uses three processes: mixing, tableting, and bottling. October’s cost and production data for the Mixing Department are given below. Note that all materials are added at the beginning of the mixing process. Output is measured in ounces. Conversion resources are added evenly throughout the process. Specifically, the mixing process consists of four linked activities: selecting, sifting, measuring and blending. Direct laborers select the appropriate chemicals, sift the materials to remove any foreign substances, and then the materials are measured and combined in a mixer to blend them thoroughly in the prescribed proportions. See the Mixing Department production and cost data for October below:
Production:
Units in process, October 1, 70% complete 10,000
Units completed and transferred out 60,000
Units in process, October 31, 40% complete 20,000
Costs:
Work in process, October 1:
Direct materials $1,000
Conversion costs $350
Total work in process $1,350
Current costs:
Direct materials $12,600
Conversion costs $3,050
Total current costs $15,650
Required:
1. Determine the number of units completed and transferred to the Tableting Department in October.
2. Compute the equivalent units using the FIFO method.
3. Compute the cost per equivalent unit using the FIFO method.
4. Compute the costs of goods transferred out and the ending work-in-process inventory using the FIFO method.
Extra Credit: Record the following journal entries - -
1. Record requisitions of materials for October
2. Record the application of overhead and the incurrence of direct labor.
3. Record the transfer of cost of goods completed from Mixing to Tableting.
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