Question
Lee's blends high-protein smoothies and packages them for sale to major grocery stores. It uses a mix of natural ingredients and vitamins to differentiate itself
Lee's blends high-protein smoothies and packages them for sale to major grocery stores. It uses a mix of natural ingredients and vitamins to differentiate itself from its competitors.
The company uses a weighted average process costing system to cost its products in two departments: Blending and Packaging. Direct materials are added at the beginning of the process in each department and conversion costs are incurred evenly throughout the process.
The following production and cost data are available for February for the Blending department:
Work in Process (beginning)80,000 units
Units started256,000
Goods units transferred out280,000
Work in process (ending)48,000
Direct
MaterialsConversion
Beginning inventory costs$ 250,000$ 379,840
Costs added$1,362,600$1,545,920
At the beginning of the period the work-in-process was 40% complete. Ending WIP was 80% complete.
Inspection is done at the end of the blending process, just before any product is transferred to Packaging. Normal spoilage is considered to be 2% of good units that pass inspection.
Required:
a.Complete the attached Production Cost Report for the Blending department.
b.Show the journal entries for
i.the addition of materials in the Blending department
ii.the addition of conversion costs in the Blending department
iii.transferring product from Blending to the Packaging department.
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