Question: Hobart Beverage Company uses the weighted-average method in its process costing system.Materials are included at the start of the production process but conversion costs are uniformlyapplied throughout the production process. The following data about the Packaging Departmentwere taken from the company's accounting records:? In 1 January 2016, there were 20,000 units in the work in process inventory that were40% completed and 150,000 units in the finished goods inventory.? The company sold 300,000 units during January.? There were 32,000 units, which were 75% complete as to conversion costs, in the workin process inventory and 120,000 units in the finished goods inventory at the end ofJanuary.? Cost data are summarized below:
WIP 1 January 2016 Cost per equivalent unitDirect Materials
$ 34,900 Materials
$2.45Conversion costs
$ 41,500 Conversion
$3.15Required:
1. How many units were transferred from the Packaging Department to the Finished GoodsDepartment during the month?
2. What were the equivalent units of production for direct materials and conversion costsfor the month of January?
3. Compute the total costs incurred in January for (a) materials and (b) conversion.
4. Compute (a) the cost of WIP Inventory as of 31 January 2016 and (b) the cost of unitscompleted and transferred out during the month.
5. What is the cost of goods sold by taking the unit cost data from the answers torequirement 3 above?
6. Assuming conversion cost consists 40% of labour costs and that manufacturingoverhead cost is 60% fixed cost, calculate how many units ABC Company must sell tobreakeven during January. Show all necessary formula and computations.