You Can Paint Too prepares and packages paint products. You Can Paint Too has two departments: Blending and Packaging. Direct materials are added at the beginning of the blending process (dyes) and at the end of the packaging process (cans). Conversion costs are added evenly throughout each process. Data from the month of May for the Blending Department are as follows:
Litres:
Beginning work in process inventory .......................................... 0
Started production...................................................................... 8,500 litres
Completed and transferred out to Packaging in May.................. 6,400 litres
Ending work in process inventory (30% of the way through
the blending process).............................................................. 2,100 litres
Costs:
Beginning work in process inventory .......................................... $ 0
Costs added during May:
Direct materials (dyes)................................................................ 4,200
Direct labour .............................................................................. 750
Manufacturing overhead............................................................. 2,500
Total costs added during May......................................................... $7,450
Requirements
1. Fill-in the time line for the Blending Department similar to Exhibit 5-6.
2. Summarize the physical flow of units and compute total equivalent units for direct materials and for conversion costs.
3. Summarize total costs to account for and find the cost per equivalent unit for direct materials and for conversion costs.
4. Assign total costs to units (litres):
a. Completed and transferred out to the Packaging Department.
b. In the Blending Department ending work in process inventory.
5. What is the average cost per litre transferred out of the Blending Department to the Packaging Department? Why would You Can Paint Too’s managers want to know this cost?