Stein Corporation makes a health beverage named Stein that is manufactured in a two-stage production process. The drink is first created in the Conversion Department where material ingredients (natural juices, supplements, preservatives, etc.) are combined. On July 1, 2014, the company had a sufficient quantity of partially completed beverage mix in the Conversion Department to make 50,000 containers of Stein. This beginning inventory had a cost of $40,000. During July, the company added ingredients necessary to make 190,000 containers of Stein. The cost of these ingredients was $200,000. During July, liquid mix representing 180,000 containers of the beverage was transferred to the Finishing Department. The beverage mix is poured into containers and packaged for shipment in the Finishing Department. Beverage that remained in the Conversion Department at the end of July was 20 percent complete. At the beginning of July the Finishing Department had 10,000 containers of beverage mix. The cost of this mix was $25,000. The department added $60,000 of manufacturing costs (materials, labor, and overhead) during July. During July, 120,000 containers of Stein were completed. The ending inventory for this department was 50 percent complete at the end of July.

a. Prepare a Cost of Production Report for the Conversion Department for July.
b. Prepare a Cost of Production Report for the Finishing Department for July.
c. If 100,000 containers of Stein are sold in July for $380,000, determine the company’s gross margin for July.

  • CreatedFebruary 07, 2014
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