PROCESS COSTING PROBLEM
Koram manufactures a product called “Blob”. It makes Blob in one department and uses a process costing system for tracking and assigning of product costs. Blob is a liquid that has no particular purpose
Here’s how it works: They use a big machine called a Blob-O-Tron. The manufacture of Blob requires one raw material, Gunk. It is made by the vat. Basically, Gunk is slowly poured in and, simultaneously, while it is being poured, the Blob-O-Tron starts to spin. This happens for exactly 20 hours. At the 20-hour mark, the last drop of Blob is poured in, and the Blob-O-Tron stops spinning and the Blob is completed. In other words, all of the materials and conversion are done simultaneously and at the exact same rate (uniform inputs).
Case One:
At the beginning of January 2015, there was no work in process. During the period, the company started production of 85,000 lbs. of Blob. Production costs for the month (materials and conversion costs) totaled $160,024. There was no ending inventory either. All the Blob produced was finished.
In all computations, round your interim calculations to FOUR decimal places AND use these rounded numbers in ALL subsequent computations. Round your final answers to the NEAREST DOLLAR.
Questions:
1) How many physical pounds of Glob were actually completed?
2) What was the manufacturing cost per lb. (that is, per unit) of Glob?
3) What was the Cost of Goods Manufactured for January? What was the dollar value of the ending work in process at January 31?