Refer to E5-42B and E5-43B. Assume the Landon Dairy Forming Department has the following costs per equivalent unit (EU) on its own production cost report for the month of January:
Cost per EU transferred in from Churning Department (see your answer from E5-42B)
Cost per Direct Materials EU 5 $0.10
Cost per Conversion Costs EU 5 $0.15
In E5-42B and E5-43B
Units in beginning Work in Process (WIP) inventory........................................35,000 units
Units started during the month (all direct materials, including cream
and salt, are added at the beginning of the churning process)..........................385,000 units
Units in ending Work in Process (WIP) inventory (60% of the way
through the process).............................................................................................20,000 units
Cost information is as follows:
WIP-Churning Department balance as of January 1:
Direct material cost included in beginning WIP balance.........................................$122,500
Conversion cost included in beginning WIP balance...................................................14,000
Beginning balance, WIP, January 1.........................................................................$136,500
Manufacturing costs incurred during January:
Direct materials used.............................................................................................$1,347,500
Direct labor...................................................................................................................25,000
Manufacturing overhead............................................................................................290,600
Total manufacturing costs entered into production during January......................$1,663,100
Requirements
1. What is the total cost, from start to finish, of producing one pound of butter during January?
2. If the company sells all 400,000 pounds of the butter made in January, at a selling price of $5.50 per pound, what is the total gross profit for the month?