Question

Janbo Company produces a variety of stationery products. One product, sealing wax sticks, passes through two processes: blending and molding. The weighted average method is used to account for the costs of production. After blending, the resulting product is sent to the molding department, where it is poured into molds and cooled. The following information relates to the blending process for August:A. Work in Process on August 1, had 30,000 pounds, 20% complete. Costs associated with partially completed units were:Materials $220,000Direct labor 30,000Overhead applied 20,000B. Work in Process on August 31, had 50,000 pounds, 40% complete.C. Units completed and transferred out totaled 480,000 pounds. Costs added during the month were (all inputs are added uniformly):Materials $5,800,000Direct labor 4,250,000Overhead applied 1,292,500Required:1A. Prepare a physical flow schedule.1B. Prepare an equivalent unit schedule.2. Calculate the unit cost.3. Compute the cost of EWIP and the cost of goods transferred out.4. Prepare a cost reconciliation.5. Suppose that the materials added uniformly in blending are paraffin and pigment and that the manager of the company wants to know how much each of these materials costs per equivalent unit produced. The costs of the materials in BWIP are as follows:Paraffin $120,000Pigment 100,000The costs of the materials added during the month are also given:Paraffin $3,250,000Pigment 2,550,000Prepare an equivalent unit schedule with cost categories for each material.

Answer 1

1a. Janbo Company

Physical Flow Schedule

Units to account for:

Units in beginning work in process 30000

Units started 500000

Total units to account for 530,000

Units accounted for:

Units completed 480,000

From ending work in process 50,000

Total units accounted for 530,000

1b. Janbo Company

Schedule of Equivalent Units

Weighted Average Method

Units completed 480,000 100% 480,000

Units in ending work in process 50,000 40% 20,000

Total equivalent units 500,000

2. Particulars Amount Amount

Beginning work in process:

Materials $220,000

Direct labor $30,000

Overhead applied $20,000 $270,000

Cost added during the month

Materials $5,800,000

Direct labor $4,250,000

Overhead applied $1,292,500 $11,342,500

Total cost $11,612,500

Equivalent cost per unit = Total cost/Total equivalent units

Equivalent cost per unit = $11,612,500/500,000

Equivalent cost per unit = $23.225

3. Ending work in process= 20000 * $23.225 = 464500

Goods transferred out = 480000 * $23.225 = 11148000

4. Janbo Company

Cost Reconciliation

Costs to account for:

Beginning WIP 270000

August costs 11342500

Total to account for 11,612,500

Costs accounted for:

Transferred out 11,148,000

Ending WIP 464,500

Total costs accounted for 11,612,500