Complete the problems on CONNECT for Project 3, Sunspot Beverages, Ltd. Use the results from Sunspot Beverages, Ltd. to complete the following requirements. Remember to show your calculations. Carry at least 3 decimals in your calculations. Use 4 decimals places for per unit amounts and whole dollars for dollar amounts in the tables.

The blended juice is transferred from the Blending department into the Packaging Department where it is bottled and packaged. Some Direct Material is added (the bottles) at the beginning of the process, while other materials and conversion costs are added evenly throughout rest of the process. Hint: You can treat the bottles as a separate raw material cost from the other material such that you will have 2 Raw Material costs in your analysis. When the Packaging process is completed, units are immediately shipped and considered sold. The following information pertains to the operations of the Packaging Department for the month of June. Complete the information with data calculated from your CONNECT problem.

Percent Complete

units

Other Material

Work in process, beginning

Work in process, ending

Transferred from Blending

from CONNECT Problem increases to Packaging

Completed and sold

Calculate (decreases) Req. 2a)

( 1) use units below in Step 1 and 2: Beg + Inc = Dec + end

Work in Process, beginning

Costs Added during June

Transferred from Blending

From CONNECT

Cost of Bottles

$ 8,400

$ 70,800

Other Material Costs

Conversion Costs

(2 points ) Determine the number of units completed and sold. __________________

(6 points) Complete the table calculating equivalent units for the Packaging Department. Hint: All units transferred to Bottling are 100% complete with respect to transferred costs and bottle costs.

Step 1: Summarize the flow of physical units: Remember to account for needs to equal accounted for

Physical Units to account for(1)

Units in beginning WIP Inventory-Bottling

Units transferred in from Blending

Total Units to account for (2)

add units from rows above

Step 2: Compute output in terms of equivalent units. The # of units completed and sold are 100% complete with respect to transfer and bottle costs categories.

Equivalent

Units

UNITS

Transferred

Bottle

Other Raw Material

Conversion

Work in Process -Bottling ending units

Units completed and sold

Total Units accounted for (3)

Note: Totals at (3) will NOT equal (2) for other and conversion but the % complete on ending units represents equivalent units. Use (3) in calculation below

(10 points) Complete the Cost Reconciliation below. Step 3: Compute cost per equivalent unit of production. which requires accumulating costs to account for. Costs NOT units. (b) and (c) rows from column $ amounts from DOLLARS table

Costs to Account for in dollars

DOLLARS

Total

Transferred

Bottle

Other Direct Material

Conversion

Beginning WIP Inventory (b)

Costs added during period (c)

Total Costs to account for (6)

Equivalent units of production from b) use (3) UNITS

Cost per equivalent unit (4)

Total column should equal sum of columns Transferred + Bottle + Other + Conversion Row (6) should equal (b) + (c) from rows above. Calculate (4) for each column as row (6) divided by row (3). Do not complete blacked out spaces as they are not necessary and can be confusing. Step 4: Assign costs to units completed and units in ending WIP. For each column, multiply # of units from step 2: times cost per unit (4) from step 3.

Costs accounted

for in dollars

DOLLARS

Total

Transferred

Bottle

Other Direct Material

Conversion

WIP -Ending balance (5)

Costs of goods completed and sold (5)

Total Costs accounted for (6)

(5) For each column trans bottle Other and Conversion, use units from Step 2 times cost per eq. unit from Step 3. Total column is sum of columns at the right.

(6) Total Cost row is sum of rows above and should equal row (6) from Step 3

(1 point) Calculate the average cost per unit sold for June. This should be the dollar amount from the Total column for Cost of goods completed and sold divided by the number of units sold.

(1 point) If Sunspot Beverages, Ltd. sold each unit for $5.00 what would their sales revenue be? What would their gross profit be?

(10 points) Greg, the production manager for the Blending Department approached Martha, the production manager for the Bottling Department regarding the companys profit targets for the year ending June 30^th. Based on preliminary profit figures, the company is within $12,000 of the years target profit. Greg has asked Martha to pull a few strings to assure they will reach their target and all employees will receive a bonus. Greg indicates that Martha can just change her estimate of the percentage completion of her ending work in process inventories. Martha is unsure. Greg says that he has worked hard to keep costs down in his department and does not want to lose his bonus because Martha couldnt keep her department under control.

Would Martha need to increase or decrease the estimated percentage completion to increase the companys operating profit? Explain your answer.

If Martha changed her estimated percentage completion by 10 in the desired direction. (Change % from 25% to 15% or 35%), What would be the new cost per unit? What would the new Cost of Goods Sold and Gross Profit amounts be? Note: You should recalculate the Cost of Goods sold using similar calculations to what is used in 1) and use this in your analysis. Note that this item is worth 10 points! Feel free to print another form of the reports. You can find blanks on D2L labeled Cost Reconciliation Reports for Project 4

(5 points) Martha is concerned about doing this. Does this seem ethical? Greg assures her she can merely say it was a mistake in next month. In next months Production Cost Report, how will her beginning WIP numbers affect the companys cost of goods sold in next month, assuming she reports the correct completion percentages next month? Your answer should be between 30 and 50 words and should include some calculations to support your answer. Review the calculations you did in the tables above and think about which numbers would be different and how. You can assume next month is exactly the same as current month that was altered for 2b. Then think about how the incorrect beginning amounts (incorrect from alterations of ending amounts in 2b) will affect COGS. Try running the calculations through the Cost Reconciliation Report.

(5 points) Given that Greg has suggested this to Martha, should she be concerned that Greg has done something similar with respect to the units that have transferred from his Blending Department into her Department? Consider what data Martha might compare from one month to the next to try and ascertain if Greg is pulling strings? Your answer should be between 30 and 50 words. Think about the cost reconciliation reports that Greg would report each month and how these would look if they were doctored. What would happen to the cost per unit transferred from Gregs department to Marthas department from one month to another? Look at how the alterations of percentages affected cost per units for Martha. If Greg alters his percentages, Martha should expect to see the same sort of effects to the transferred in cost per unit.

There is no other connect data for this worksheet, all the answers are given.

Sunspot Beverages, Ltd., of Fiji makes blended tropical fruit drinks in two stages. Fruit juices are extracted from fresh fruits and then blended in the Blending Department. The blended juices are then bottled and packed for shipping in the Bottling Department. The following information pertains to the operations of the Blending Department for June. Percent Completed Units Materials Conversion 70% 40% Work in process, beginning 100,000 477,500 Started into production 467,500 Completed and transferred out 110.000 75% Work in process, ending 25% Materials Conversion Work in process, beginning 41,300 15,100 Cost added during June 442,700 321,500 Required Assume that the company uses the weighted-average method. 1. Determine the equivalent units for June for the Blending Department Materials Conversion Equivalent units of production 550,000 V 495,000 Sunspot Beverages, Ltd., of Fiji makes blended tropical fruit drinks in two stages. Fruit juices are extracted from fresh fruits and then blended in the Blending Department. The blended juices are then bottled and packed for shipping in the Bottling Department. The following information pertains to the operations of the Blending Department for June. Percent Completed Units Materials Conversion 70% 40% Work in process, beginning 100,000 477,500 Started into production 467,500 Completed and transferred out 110.000 75% Work in process, ending 25% Materials Conversion Work in process, beginning 41,300 15,100 Cost added during June 442,700 321,500 Required Assume that the company uses the weighted-average method. 1. Determine the equivalent units for June for the Blending Department Materials Conversion Equivalent units of production 550,000 V 495,000