Question

The Lucy Paint Company prepares and packages paint products. The company has two departments: (1) Blending and (2) Packaging. Direct materials are added at the beginning of the blending process (dyes) and at the end of the packaging process (cans). Conversion costs are added evenly throughout each process. Data from the month of May for the Blending Department are as follows:

Gallons:
Beginning work in process inventory................................................... 0
Started production............................................................................... 8,400 gallons
Completed and transferred out to Packaging in May.......................... 6,200 gallons
Ending work in process inventory (40% of the way through the
blending process).............................................................................. 2,200 gallons
Costs:
Beginning work in process inventory................................................... $ 0
Costs added during May: Direct materials (dyes).............................. 5,460
Direct labor........................................................................................... 920
Manufacturing overhead...................................................................... 1,912
Total costs added during May.................................................................. $ 8,292

Requirements
1. Draw a time line.
2. Summarize the physical flow of units and compute total equivalent units for direct ­materials and for conversion costs.
3. Summarize total costs to account for and find 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 Blending Department ending work in process inventory
5. What is the average cost per gallon transferred out of the Blending Department to the Packaging Department? Why would the company’s managers want to know this cost?




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  • CreatedAugust 27, 2014
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