Problem: PURDY CORPORATION
PURDY CORPORATION produces canned chicken a la king. The chicken a la king passes through three departments;
(1) Mixing,
(2) Retort (sterilization), and
(3) Packing. In the Mixing Department, chicken and cream are added at the beginning of the process, the mixture is partly cooked, and chopped green peppers and mushrooms are added at the end of the process. Conversion costs are added evenly throughout the mixing process.
February data from the Mixing Department are as follows:
Gallons
Beginning work in process inventory 1,000 gallons
Started production 14,000 gallons
Completed and transferred out to Retort in February 10,000 gallons
Note: The ending inventory is 60% complete as to mixing.
Costs
Beginning work in process inventory
Chicken $3,000
Cream $1,500
Green peppers and mushrooms $7,000
Direct labor $12,000
Manufacturing overhead $8,000
Costs added during February
Chicken $23,250
Cream $12,000
Green peppers and mushrooms $47,000
Direct labor $92,000
Manufacturing overhead $99,250
REQUIRED: 1. Compute the cost per equivalent unit for each cost item in the Mixing Department. If necessary, round to the nearest cent.
2. Compute the total costs for the units:
a. Completed and transferred out to the Retort Department.
b. In the Mixing Department's ending work in process inventory.
3. Provide the journal entry for the completed and transferred out unit to the Retort Department.