Question

Sunny Company manufactures and sells several different kinds of soft drinks. Direct materials (sugar syrup and artificial flavor) are added at the beginning of production in the Mixing Department. Direct labor and overhead costs are applied to products throughout the process. For August, beginning inventory for the citrus flavor was 2,400 gallons, 80 percent complete. Ending inventory was 3,600 gallons, 50 percent complete. Production data show 240,000 gallons started during August. A total of 238,800 gallons was completed and transferred to the Bottling Department. Beginning inventory costs were $576 for direct materials and $672 for conversion costs. Current period costs were $57,600 for direct materials and $83,538 for conversion costs.

Required
1. Using the FIFO costing method, prepare a process cost report for the Mixing Department for August.
2. From the information in the process cost report, identify the amount that should be transferred out of the Work in Process Inventory account, and state where those dollars should be transferred.
3. Repeat requirements 1 and 2 using the average costing method.



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  • CreatedMarch 26, 2014
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