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FIFO Method, Two-Department Analysis

Healthway uses a process-costing system to compute the unit costs of the minerals that it produces. It has three departments: Mixing, Tableting, and Bottling. In Mixing, at the beginning of the process all materials are added and the ingredients for the minerals are measured, sifted, and blended together. The mix is transferred out in gallon containers. The Tableting Department takes the powdered mix and places it in capsules. One gallon of powdered mix converts to 1,600 capsules. After the capsules are filled and polished, they are transferred to Bottling where they are placed in bottles, which are then affixed with a safety seal and a lid and labeled. Each bottle receives 50 capsules.

During July, the following results are available for the first two departments (direct materials are added at the beginning in both departments):



Mixing
Tableting
Beginning inventories:





  Physical units
5gallons
4,000capsules
  Costs:





    Direct materials
$120

$32
    Direct labor
128

20
    Overhead
?

?
    Transferred in
—

140
Current production:





  Transferred out
125gallons
198,000capsules
  Ending inventory
6

6000
  Costs:





    Direct materials
$3,144

$1,584
    Transferred in
—

?
    Direct labor
4,096

1,944
    Overhead
?

?
Percentage of completion:





  Beginning inventory
40%
50%
  Ending inventory
50

40

Overhead in both departments is applied as a percentage of direct labor costs. In the Mixing Department, overhead is 200 percent of direct labor. In the Tableting Department, the overhead rate is 150 percent of direct labor.

Required:

1. Prepare a production report for the Mixing Department using the FIFO method. Follow the five steps outlined in the chapter. If required, round your cost per equivalent unit answers to three decimal places and use them in subsequent computations. Round all other calculations and final answers to the nearest dollar.

Healthway
Mixing Department
Production Report for July 20XX
Unit Information
Units to account for:
Units, beginning work in process
Units started
Total units to account for
Units accounted for:


Equivalent Units

Physical FlowDirect MaterialsConversion Costs
Units started and completed
Units, beginning work in process
Units, ending work in process
Total units accounted for
Cost Information
Costs to account for:

Direct MaterialsConversion CostsTotal
Costs in beginning work in process$$$
Costs added by department
Total costs to account for$$$
Cost per equivalent unit$$$
Costs accounted for:

Transferred OutEnding Work in ProcessTotal
Goods started and completed$
$
Units, beginning work in process


Prior period
Current period
Ending work in process:


Direct materials
$
Conversion costs
Total costs accounted for$$$

2. Prepare a production report for the Tableting Department using the FIFO method. Follow the five steps outlined in the chapter. If required, round your cost per equivalent unit answers to four decimal places and use them in subsequent computations. Round all other calculations and final answers to the nearest dollar. If an amount is zero, enter "0".

Healthway
Tableting Department
Production Report for July 20XX
Unit Information
Units to account for:
Units, beginning work in process
Units started
Total units to account for
Units accounted for:


Equivalent Units

Physical FlowTransferred InDirect MaterialsConversion Costs
Units started and completed
Units, beginning work in process
Units, ending work in process
Total units accounted for
Cost Information
Costs to account for:

Transferred InDirect MaterialsConversion CostsTotal
Costs in beginning work in process$$$$
Costs added by department
Total costs to account for$$$$
Cost per equivalent unit$$$$
Costs accounted for:

Transferred OutEnding Work in ProcessTotal
Goods transferred out$
$
Units, beginning work in process:


Prior period
Current period
Ending work in process:


Transferred in
Direct materials
Conversion costs
Total costs accounted for$$


accounting   
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