Samson Winery in Kingston, New York, has two departments: Fermenting and Packaging. Direct materials are added at the beginning of the fermenting process (grapes) and at the end of the packaging process (bottles). Conversion costs are added evenly throughout each process. Data from the month of March for the Fermenting Department are as follows:

Gallons:

Beginning work in process inventory.......................................... 2,200 gallons

Started production....................................................................... 5,980 gallons

Completed and transferred out to Packaging in March............... 6,480 gallons

Ending work in process inventory (80% of the way through the

fermenting process) .................................................................... 1,700 gallons

Costs:

Beginning work in process inventory ($2,300 of direct materials

and $2,376 of conversion cost) ...........................................................$ 4,676

Costs added during March:

Direct materials.................................................................................... $ 9,970

Direct labor................................................................................................ 900

Manufacturing overhead......................................................................... 2,212

Total costs added during March......................................................... $13,082

Requirements

1. Draw a time line for the Fermenting Department.

2. Summarize the flow of physical units and compute the total equivalent units.

3. Summarize total costs to account for and compute the cost per equivalent unit for direct materials and conversion costs.

4. Assign total costs to units (gallons):

a. Completed and transferred out to the Packaging Department

b. In the Fermenting Department ending work in process inventory

5. What is the average cost per gallon transferred out of Fermenting into Packaging? Why would Samson's managers want to know this cost?