Question
WholesomeWholesome Dairy produces an organic butter that is sold by the pound. The production of the butter begins in the Churning Department. Data for the
WholesomeWholesome
Dairy produces an organic butter that is sold by the pound. The production of the butter begins in the Churning Department.
Data for the Churning Department for
JanuaryJanuary
follows:
Units in beginning Work in Process (WIP) inventory
90,000 units
Units started during the month (all direct materials, including cream
and salt, are added at the beginning of the churning process)
1,900,000 units
Units in ending Work in Process (WIP) inventory (50% of the way
through the process)
140,000 units
Cost information is as follows:
WIP - Churning Department balance as of January 1:
Direct material cost included in beginning WIP balance
519,100
Conversion cost included in beginning WIP balance
249,800
Beginning balance, WIP, January 1
$768,900
Manufacturing costs incurred during January:
Direct materials used
$1,650,000
Direct labor
15,000
Manufacturing overhead
580,000
Total manufacturing costs entered into production during January
$2,245,000
1. | Prepare a production cost report for JanuaryJanuary for the Churning Department. |
2. | How much did it cost to make one pound of butter in the Churning Department? |
3. | How much did it cost to make a partially completed pound of butter in the Churning Department? Does this make sense? Why or why not?
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