Woodson Dairy produces an organic butter that is sold by the pound. The production of the butter begins in the Churning Department.

Data for the Churning Department for January follows:

Units in beginning Work in Process (WIP) inventory………………………………….100,000 units

Units started during the month (all direct materials, including cream

and salt, are added at the beginning of the churning process)…………………….1,500,000 units

Units in ending Work in Process (WIP) inventory (40% of the way

through the process)………………………………………………………………………………..200,000 units

Cost information is as follows:

WIP-Churning Department balance as of January 1:

Direct material cost included in beginning WIP balance……………………………………$110,000

Conversion cost included in beginning WIP balance…………………………………………….24,000

Beginning balance, WIP, January 1…………………………………………………………………$134,000

Manufacturing costs incurred during January:

Direct materials used…………………………………………………………………………………..$1,730,000

Direct labor………………………………………………………………………………………………………10,000

Manufacturing overhead………………………………………………………………………………….558,000

Total manufacturing costs entered into production during January…………………..$2,298,000

Requirements

1. Prepare a production cost report for January for the Churning Department.

2. How much did it cost to make one pound of butter in the Churning Department?

3. How much did it cost to make a partially completed pound of butter in the Churning Department? Does this make sense? Why or why not?



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