Problem 1. Medi Syrup is a large cough syrup producer. The cough syrup passes through several stages during production. In department B, the following activity was recorded for October.
- Beginning work-in-process on October 1 was 40,000 gallons.
- 20,000 gallons were started into production in department B during the month.
- 55,000 gallons were completed and transferred out to department C during the month.
- The gallons remaining in work-in-process in department B at the end of the month were 80% complete as to material costs and 60% complete as to conversion costs.
Prepare a physical flow schedule and a schedule of equivalent units for the department.
Problem 2. Blue line company makes two kinds of ink and uses a process costing system. The company's WIP inventory for blue ink on November 1 consisted of 10,000 units. An additional 8,000 units were entered into production in November, and 3,000 units were completed and transferred to finished goods inventory. The 15,000 units in ending WIP inventory were 100% complete as to materials and 80% complete as to conversion costs. Cost information for November for blue ink production is as follows:
Costs in beginning WIP:
Direct labor = $20,000
Direct materials = $10,000
Manufacturing overhead $30,000
The following costs were added during the month:
Direct labor $5000
Direct materials $14,840
Manufacturing overhead $20,000
a. Prepare a schedule of equivalent units.
b. Compute the cost per equivalent unit for materials.
c. Compute the cost per equivalent for conversion.