Question

Sunspot Beverages, Ltd., of Fiji uses the weighted-average method in its process costing system. It makes blended tropical fruit drinks in two stages. Fruit juices are extracted from fresh fruits and then blended in the Blending Department. The blended juices are then bottled and packed for shipping in the Bottling Department. The following information pertains to the operations of the Blending Department for June.

		Percent Completed
	Units	Materials	Conversion
Work in process, beginning	62,000	70%	40%
Started into production	316,000
Completed and transferred out	306,000
Work in process, ending	72,000	75%	25%

	Materials		Conversion
Work in process, beginning	$	22,100	$	7,600
Cost added during June	$	237,100	$	160,880

Calculate the Blending Department's cost of units transferred out to the Bottling Department for materials, conversion, and in total for June.

Prepare a cost reconciliation report for the Blending Department for June

Answer 1

Equivalent unit

	Material	Conversion
Unit transferred out	306000	306000
Ending WIP	72000*75% = 54000	18000
Equivalent unit	360000	324000

Cost per equivalent unit of material = (22100+237100)/360000 = 0.72

Cost per equivalent unit of conversion = (7600+160880)/324000 = 0.52

Cost of unit transferred out

	Material	Conversion	Total
Cost of unit transferred out	306000*.72 = 220320	159120	379440

Cost reconciliation

Cost to be accounted for
Beginning WIP	29700
Cost added	397980
Total Cost to be accounted for	427680
Cost accounted as
Cost of unit transferred out	379440
Cost of ending WIP (54000*.72+18000*.52)	48240
Total Cost accounted as	427680