Refer to the Canadian Springs Filtration Department Data Set.
Canadian Springs produces premium bottled water. Canadian Springs purchases artesian water, stores the water in large tanks, and then runs the water through two processes:
• Filtration, where workers microfilter and ozonate the water
• Bottling, where workers bottle and package the filtered water
During February, the filtration process incurs the following costs in processing 200,000 litres:
Wages of workers operating the filtration equipment............................ $ 11,100
Wages of workers operating ozonation equipment................................ 12,850
Manufacturing overhead allocated to filtration..................................... 24,050
Water.................................................................................................... 120,000
Canadian Springs has no beginning inventory in the Filtration Department.
Requirements
1. Compute the February conversion costs in the Filtration Department.
2. If the Filtration Department completely processed 200,000 litres, what would be the average filtration cost per litre?
3. Now, assume that the total costs of the filtration process listed in the previous chart yield 160,000 litres that are completely filtered and ozonated, while the remaining 40,000 litres are only partway through the process at the end of February. Is the cost per completely filtered and ozonated litre higher, lower, or the same as in Requirement 2? Why?