Paint by Number prepares and packages paint products. Paint by Number has two departments: (1) Blending and
Question:
Paint by Number prepares and packages paint products. Paint by Number 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.......................................................................... 9,200 gallons
Completed and transferred out to
Packaging in May........................................................................... 6,600 gallons
Ending work in process inventory (30% of the way
through the blending process)........................................................ 2,600 gallons
Costs:
Beginning work in process inventory............................................................ $ 0
Costs added during May:
Direct materials (dyes).............................................................................. 5,980
Direct labor................................................................................................... 850
Manufacturing overhead............................................................................ 1,733
Total costs added during May................................................................. $8,563
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 Paint by Number's managers want to know this cost?
Step by Step Answer: