Problem D A bottling company bottles soft drinks using a process cost system. Following are cost and production data for the mixing department for June:

Work in Process, June 1: 56,000 units (65% complete for materials, 80% complete for conversion)

Direct material cost $11,620

Conversion cost $16,240

Added during June: 133,000 units

Direct material cost $29,960

Conversion cost $41,720

Work in Process, June 30: 63,000 units

(100% complete for materials, 30% complete for conversion)

Prepare a production cost report for the month ended June 30 using the weighted average method. Provide the journal entry to record transferring completed units to finished goods.

Critical Thinking: Explain why we use equivalent units in Process Costing.