Healthway uses a process costing system to compute the unit costs of the minerals that it produces. It has three departments: Picking, Encapsulating, and Bottling. In Picking, the in¬

gredients for the minerals are measured, sifted, and blended together. The mix is transferred out in gallon containers. The Encapsulating Department takes the powdered mix and places it in capsules. One gallon of powdered mix converts into 1,600 capsules. After the capsules are filled and polished, they are transferred to bottling where they are placed in bottles, which are then affixed with a safety seal and a lid and labeled. Each bottle receives fifty capsules.

During July, the following results are available for the first two departments (materials are added at the beginning in both departments):

Overhead in both departments is applied as a percentage of direct labor costs. In the Picking Department, overhead is 200% of direct labor. In the Encapsulating Department, the over¬
head rate is 150% of direct labor.
Required:
1. Prepare a cost of production report for the Picking Department using the weighted average method. Pollow the five steps outlined in the chapter.
2. Prepare a cost of production report for the Encapsulating Department. Follow the five

Transcribed Image Text:

Picking Encapsulating Beginning inventories: Physical units 5 gallons 4,000 Costs: Materials $120 $32 Labor $128 $20 Overhead $? $? Transferred in $140