E$5-35$A$.$ Complete five$-$step procedure in first department $($Learning

Objective $3)$

Paulson Winery in Albany, 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 incurred evenly throughout each process. Data from the month of March for the Fermenting Department are as follows:

Gallons:

Beginning work in process inventory

$2,100$ gallons

Started production

$5,860$ gallons

Completed and transferred out to Packaging in March

$6,560$ gallons

Ending wow.k in process inventory $(80\%$ of the way through the

$1,400$ gallons fermenting process$)$

Costs:

Beginning work in process inventory $$2,500$ of direct materials and $$3,715$ of conversion cost$)$

$$6,215$

Costs added during March:

Direct materials

Direct labor

Manufacturing overhead

Total costs added during March

$$9,440$

$600$

$1,829$

$$11,869$

Requirements

Draw a timeline for the Fermenting Department.

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

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

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

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