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.
To determine how materials and conversion are broken up in this problem, we need to understand the production process and the associated costs.
In this case, the production process consists of three processes: mixing, tableting, and bottling. The focus is on the Mixing Department.
1. Materials:
In the mixing process, all materials are added at the beginning. The costs associated with direct materials are given for both the beginning work in process (October 1) and the current costs. These costs represent the amount spent on materials for the given time period.
To determine the number of units completed and transferred to the Tableting Department, we need to look at the units in process. In this case, 60,000 units were completed and transferred out in October.
2. Conversion:
Conversion costs refer to the labor and overhead costs incurred in the production process. These costs are added evenly throughout the process. In the case of the mixing process, the conversion activities include selecting, sifting, measuring, and blending. Direct laborers are involved in these activities.
To calculate the equivalent units using the FIFO method, we need to consider the units in process at the beginning (October 1) and the units in process at the end (October 31), along with the units completed and transferred out. The equivalent units account for the units that were partially completed at the beginning and end of the period.
3. Cost per equivalent unit:
To compute the cost per equivalent unit using the FIFO method, we divide the total current costs (direct materials and conversion costs) by the equivalent units calculated.
4. Costs of goods transferred out and ending work-in-process inventory:
To determine the costs of goods transferred out and the ending work-in-process inventory using the FIFO method, we multiply the cost per equivalent unit by the corresponding units completed and transferred out and the units in process, respectively.
For the extra credit portion, recording journal entries would involve documenting the relevant transactions in the accounting system. The specific journal entries required would depend on the details provided in the problem.
It is important to note that to fully answer the required questions and complete the extra credit, detailed calculations and analysis of the given numbers are necessary.