Complete five-step procedure in first department (Learning Objective 3)

Color World prepares and packages paint products. Color World has two depart¬ ments: (1) blending and (2) packaging. Direct materials are added at the beginning of the blending process (dyes) and at the end of the packaging process (cans). Conversion costs are added evenly throughout each process. Data from the month of May for the Blending Department are as follows:

Requirements 1. Draw a time line for the Blending Department similar to Exhibit 4-6.
2. Summarize the physical flow of units and compute total equivalent units for direct materials and for conversion costs.
3. Summarize total costs to account for and find the cost per equivalent unit for direct materials and conversion costs.
4. Assign total costs to units (gallons):

a. Completed and transferred out to the Packaging Department.

b. In the Blending Department ending work in process inventory.
5. What is the average cost per gallon transferred out of the Blending Department to the Packaging Department? Why would Color World’s managers want to know this cost?

Transcribed Image Text:

Gallons: Beginning work in process inventory..... Started production ..................... 0 8,000 gallons Completed and transferred out to Packaging in May.............. 6,000 gallons Ending work in process inventory (30% of the way through the blending process) 2,000 gallons Costs: Beginning work in process inventory. $ 0 Costs added during May: Direct materials (dyes)........... 4,800 Direct labor Manufacturing overhead. Total costs added during May..... 800 1,840 $7,440