Dahl’s Treats makes institutional cakes. Finished cakes must pass through two departments: Mixing and Baking. Vats of cake batter are processed in the Mixing Department and then transferred to the Baking Department, where individual cakes are baked, cooled, and frosted. There were 200 gallons of partially mixed batter in the Mixing Department’s inventory on August 1. The batter was 100 percent complete with respect to direct materials, but only 20 percent complete with respect to conversion. Manufacturing costs assigned to the inventory carried forward from July totaled $440. During August, the Mixing Department started 8,000 new gallons of batter. August direct materials costs in the Mixing Department totaled $16,000, and conversion costs totaled $8,120. Ending inventory on August 31 consisted of 100 partially mixed gallons of batter. These units were 100 percent complete with respect to direct materials, but only 60 percent complete with respect to conversion.
a. Prepare a schedule showing:
(1) Gallons of mix transferred from the Mixing Department to the Baking Department in August, and
(2) Gallons of mix started and completed by the Mixing Department in August.
b. Compute the equivalent units of input resources for the Mixing Department in August.
c. Compute the cost per equivalent unit of input resource for the Mixing Department in August.
d. Prepare the summary journal entry required to transfer the cost of fully mixed batter from the Mixing Department to the Baking Department in August.
e. Compute the total cost assigned to the Mixing Department’s ending inventory on August 31.