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

Newton Winery in Newton, Massachusetts, has two departments: Fermenting and Packaging. Direct materials are added at the beginning of the fermenting process (grapes) and at the end of the packaging process (bottles). Conversion costs are incurred evenly throughout each process. Data from the month of March for the Fermenting Department are as follows:

Gallons:Beginning work in process inventory2,900 gallonsStarted production4,770 gallonsCompleted and transferred out to Packaging in March6,420 gallonsEnding work in process inventory (80% of the way through the fermenting process)1,250 gallonsCosts:Beginning work in process inventory ($2,100 of direct materials and $1,409 of conversion cost)$ 3,509Costs added during March:Direct materials$ 10,172Direct labor1,000Manufacturing overhead1,301Total costs added during March$ 12,473

Requirements

1. Summarize the flow of physical units and compute the total equivalent units.
2. Summarize total costs to account for and compute the cost per equivalent unit for direct materials and conversion costs.
3. Assign total costs to units (gallons):
4. Completed and transferred out to the Packaging Department
5. In the Fermenting Department ending work in process inventory
6. What is the average cost per gallon transferred out of Fermenting into Packaging? Why would the company's managers want to know this cost?