Question
Saline Solutions uses process costing to account for production of its unique compound BG at its River Plant. The River Plant has two departments: R
Saline Solutions uses process costing to account for production of its unique compound BG at its River Plant. The River Plant has two departments: R and S. Raw materials are added at two points in the production of BG. First, rubber pellets are added at the beginning of production in Department R. Next, a liquid thinner is added in Department R when the product is 60 percent complete with respect to conversion costs. Once the basic compound is completed in Department R, it is transferred to Department S for mixing and packaging. The following information is available from the River Plant for May. (No new material is added in Department S.) Department S Production and Costs: May Beginning inventory (56,000 units, 40% complete with respect to Department S costs) Total cost (Department R and Department S) cost: Beginning inventory $ 490,554 Current work (520,000 units started) Department R costs $ 3,458,600 Department S costs 1,495,326 The ending inventory has 76,000 units, which are 100 percent complete for Department R costs.
Required: a. Assume that Saline Solutions used weighted-average process costing and that the cost per equivalent unit for May for materials in Department S is $6.80 and for conversion costs it is $2.80. Prepare a production cost report for Saline Solutions' Department S for the month of May.
b. What is the cost of product transferred out of Department S for May?
c. What is the cost of ending inventory in Department S for May?
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