Process Costing

1. Explain the difference and similarity between completed units and equivalent completed units.

2. Star, Inc., manufactures a product that passes through two processes: mixing and packaging. All manufacturing costs are added uniformly in the packaging department.

Information for packaging the department for June follows:

Work in process, June 1:

Units (30% complete) 15,000 units

Started new in June 93,000 units

Direct materials $4,000

Direct labor $3,000

Overhead $2,376

The following costs were incurred by the packaging department (last manufacturing process) during June:

Direct materials $50,000

Direct labor $30,000

Overhead $12,000

At June 30, 8,000 units (material 100%, conversion 60%) complete remained in the packaging department.

Required:

a. Calculate total equivalent units of production for June.

b. Determine the cost of goods transferred FG.

c. Determine the cost of Junes ending work in process for the packaging

d. Calculate the cost of goods sold for the month of July & prepare profit & loss statement for the month of July given Sale is $147,750, admin. expenses is $8,000 & Sales expenses is $2,400.