Additional Analysis
	1) Journal entry needed
	2) Total cost per unit:
	Blending DM
	Blending CC
	Forming DM
	Forming CC
	Total cost per unit		Check figure	$ 10.45
	3)
	Henkel Industries
	Income Statement
	For the Month Ending May 31
		Per unit	Total
	Sales Revenue
	Operating expenses
	Operating income
	4)
	Inventory Analysis	Units	Cost
	WIP- Blending
	WIP- Forming
	Finished Goods
	5A) Total cost per unit
	Blending DM
	Blending CC
	Forming DM
	Forming CC
	Total cost per unit
	5B)
	Income Statement
	For the Month Ending May 31
		Per unit	Total
	Sales Revenue
			$ 2,979,600	Check figure
	Difference in operating income:		Increase or Decrease when 60% is used?
	Briefly explain the reason for the difference. Also, if managers want to inflate earnings in a particular period, what can they do?

Department Data - May

Production Cost Report: Blending Department - May

Information about units:

FLOW OF UNITS

Physical Units

DM EU

Conversion EU

Units in Beginning WIP

25,000

Units to account for:

Started during month

220,000

Beginning work in process

25,000

Units in Ending WIP

30,000

Started in production

220,000

Total units to account for

245,000

Percentage of completion:

Direct materials

100%

Units accounted for:

Conversion

80%

Completed and transferred out

215,000

215,000

215,000

Ending WIP

30,000

30,000

24,000

Costs in Beginning WIP

Total units accounted for

245,000

245,000

239,000

DM in beginning WIP

132500

Check figure

245,000

Conversion costs in beginning WIP

78300

FLOW OF COSTS

Total

DM

Conversion

Costs to account for:

Cost information for the current month:

Beginning work in process

$ 210,800.00

$ 132,500.00

$ 78,300.00

DM traced to Dept during the month

1153750

Costs added during month

$ 1,816,350.00

$ 1,153,750.00

$ 662,600.00

DL traced to Dept during the month

45000

Total costs to account for

$ 2,027,150.00

$ 1,286,250.00

$ 740,900.00

MOH allocated to dept during the month

617600

Cost per equivalent unit

$ 5.25

$ 3.10

Costs accounted for:

Completed and transferred out

$ 1,795,250.00

$ 1,128,750.00

$ 666,500.00

Ending WIP

$ 231,900.00

$ 157,500.00

$ 74,400.00

Total costs accounted for

$ 2,027,150.00

$ 1,286,250.00

$ 740,900.00

Directions:

Check figure

$ 2,027,150

1) Record the journal entry that needs to reflect the units completed and transferred out of the Blending Dept. during the month.

2) In addition to the transferred in costs, the Forming Dept. showed the following costs per equivalent unit on their May production cost report:

Direct Material Cost/ EU= $ 1.50

Conversion Cost/ EU= $0.60THe controller wants to know the cost of making one unit of product in MAy, from START to FINISH. Show your calculations by listing each of the costs per EU from all of the departments that make up the total cost. Format the cost unit in dollars and cents.

3)During the month Henkel sold 180,000 of the units it produced during May at a slaes price of $30 per unit. Operrating expenses for the month totaled $525,000. The controller would like you to prepare a draft of the companyies income statement. she would like you to include information about the gross profit per unit, as well as the total for the month. Make sure you format everything in dollars and cents.

4) At the beginning of May, the company had no FInished Goods inventory and No WIP in the forming department. All units that transferred out of the blending dept. in May also made it completely through the forming dept. in May. The controller would like you to prepare an analysis of the companies ending WIP and FG inventory at MAy 31.

a) How many units are in each Departments WIP?

b)What is the cost balance for each Departments WIP?

c)How many units are in Finished Goods Inventory?

d) What is the total cost balance in finished Good Inventory?