The Bright Day 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 incurred evenly throughout each process. Data from the month of June for the Blending Department are as follows:

Gallons:

Beginning work in process inventory …………………………………………………………… 0

Started production …………………………………………………………………… 9,600 gallons

Completed and transferred out to Packaging in June ……………………. 6,800 gallons

Ending work in process inventory (45% of the way through the

blending process) …………………………………………………………………….. 2,800 gallons

Costs:

Beginning work in process inventory ……………………………………………………….. $ 0

Costs added during June:

Direct materials (dyes) ………………………………………………………………………. $6,240

Direct labor …………………………………………………………………………………………… 950

Manufacturing overhead ……………………………………………………………………… 1,871

Total costs added during June ……………………………………………………………. $9,061

Requirements

1. Fill in the time line for the Blending Department.

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 for 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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