Refreshing Water Company produces premium bottled water. In the second department, the Bottling Department, conversion costs are incurred evenly throughout the bottling process, but packaging materials are not added until the end of the process. Costs in beginning Work-in-Process Inventory include transferred in costs of \(1,400, direct labor of \)700, and manufacturing overhead of \(330. March data for the Bottling Department follow:

REFRESHING WATER COMPANY WORK-IN-PROCESS INVENTORY – BOTTLING Month ended March 31,2018
Dollars
	Units	Transferred in	Direct materials	Direct labor	Manufacturing overheads	Total costs
Beginning inventory, Mar. 1 (40% complete)	15,000	\)1,400		\(700	\)330	\(2,430
Production started	160,000	135,100	\)30,400	33,100	16,300	214,900
Transferred out	152,000
Ending inventory, Mar 31 (70% completed)	23,000

Requirements

1. Prepare a production cost report for the Bottling Department for the month of

March. The company uses the weighted-average method.

2. Prepare the journal entry to record the cost of units completed and transferred out.

3. Post all transactions to the Work-in-Process Inventory—Bottling T-account. What is the ending balance?

Step by step solution

01

Step-by-Step Solution:Step 1: Production Cost Report

The production cost report is prepared by the company's management using the process costing system for determining the cost of the products. It shows the detailed computation of the total cost.

02

Equivalent unit of production for transferred in units

$$\begin{gathered} \mathbf{EUP}\mathbf{}\mathbf{for}\mathbf{}\mathbf{transferred}\mathbf{}\mathbf{in}\mathbf{=}(\mathbf{Completed}\mathbf{}\mathbf{units}\mathbf{\times }\mathbf{Completion}\mathbf{\%})\mathbf{+}(\mathbf{Ending}\mathbf{}\mathbf{WIP}\mathbf{}\mathbf{units}\mathbf{\times }\mathbf{Completion}\mathbf{\%}) \\ \mathbf{=}(\mathbf{152}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{100}\mathbf{\%})\mathbf{+}(\mathbf{23}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{100}\mathbf{\%}) \\ \mathbf{=}\mathbf{175}\mathbf{,}\mathbf{000} \end{gathered}$$

03

Equivalent unit of production for direct material

$$\begin{gathered} \mathbf{EUP}\mathbf{}\mathbf{}\mathbf{for}\mathbf{}\mathbf{}\mathbf{}\mathbf{Direct}\mathbf{}\mathbf{materials}\mathbf{=}(\mathbf{Completed}\mathbf{}\mathbf{units}\mathbf{\times }\mathbf{Completion}\mathbf{\%}) \\ \mathbf{=}(\mathbf{152}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{100}\mathbf{\%}) \\ \mathbf{=}\mathbf{152}\mathbf{,}\mathbf{000} \end{gathered}$$

04

Equivalent unit of production for conversion costs

$$\begin{gathered} \mathbf{EUP}\mathbf{}\mathbf{for}\mathbf{}\mathbf{Conversion}\mathbf{}\mathbf{costs}\mathbf{=}(\mathbf{Completed}\mathbf{}\mathbf{units}\mathbf{\times }\mathbf{Completion}\mathbf{\%})\mathbf{+}(\mathbf{EndingWIPunits}\mathbf{\times }\mathbf{Completion}\mathbf{\%}) \\ \mathbf{=}(\mathbf{152}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{100}\mathbf{\%})\mathbf{+}(\mathbf{23}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{70}\mathbf{\%}) \\ \mathbf{=}\mathbf{168}\mathbf{,}\mathbf{100} \end{gathered}$$

05

Work-in-process inventory – Bottling T account

Particulars	Amount ($)	Particulars	Amount ($)
Beginning balance		Finished goods inventory	194,560
Transferred in	1,400
Direct labor	700
Manufacturing overhead	330
Production started
Transferred in	135,100
Direct materials	30,400
Direct labor	33,100
Manufacturing overhead	16,300	Ending balance	22,770

Unlock Step-by-Step Solutions & Ace Your Exams!

• Full Textbook Solutions

  Get detailed explanations and key concepts

• Unlimited Al creation

  Al flashcards, explanations, exams and more...

• Ads-free access

  To over 500 millions flashcards

• Money-back guarantee

  We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!