PROBLEM #3

Process Job Costing and Equivalent Units of Production
Bay Manufacturing produces paint. The company has two processes: mixing and packaging.
The ingredients for the paint are mixed in large batches and then transferred to the packaging
department, where one-gallon cans are filled, capped, labeled, and boxed.
There was no work in process on February 1. The materials are all brought to the packaging job up front
and charged to the job. Nothing is transferred to finished goods until the entire job is complete. The
materials costs include the packaging, material, and the cost transferred from the mixing department.
On February 2, 15,000 gallons (job 2-1) were transferred into the packaging department from the
mixing department and completed on February 19.
The costs incurred to complete job 2-1 in the packaging department are as follows:
Materials	56,250
Labor	11,250
Overhead (applied based on direct labor hours)	7,500
On February 20, another 20,000 gallons (job 2-2) were transferred into the packaging department.
Job 2-2 was 50% complete as to labor at the end of the month.
The costs incurred (unit cost unchanged from job 2-1) to complete job 2-2 in the packaging
department are as follows:
Materials	75,000
Labor	15,000
Overhead (applied based on direct labor hours)	10,000
INSTRUCTIONS:
1. Compute the physical units of production.
2. Compute the cost per unit to complete packaging for labor, materials, overhead, and total.
3. Compute equivalent units and cost of work in process as of the end of February.
4. Record journal entries for:
a. the movement of materials from materials inventory to each job
b. the allocation of payroll to each job
c. the application of overhead to each job
d. the movement of work in process to finished goods