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Requirement 2. Summarize the flow of physical units and compute the total equivalent units.

Fermenting Department
Equivalent Unit Computation
Month Ended March 31
	Flow of	Equivalent Units
	Physical	Direct	Conversion
Flow of Production	Units	Materials	Costs
Units to account for:
Units accounted for:
Total equivalent units

Requirement 3. Summarize total costs to account for and compute the cost per equivalent unit for direct materials and conversion costs. (Enter the cost per equivalent unit to the nearest cent.)

Fermenting Department
Cost per Equivalent Unit
Month Ended March 31
	Direct	Conversion
	Materials	Costs	Total
Cost per equivalent unit

Requirement 4. Assign total costs to units (gallons) (a) completed and transferred out to the Packaging Department and (b) in the Fermenting Department's ending work in process inventory. (Enter quantities first, then the cost per equivalent unit amounts in the same order as calculated in the preceding step. Enter your answers to the nearest cent.)

Fermenting Department
Month Ended March 31
Assigning Costs
		Direct	Conversion
		Materials	Costs	Total
a.	Completed and transferred out:
b.	Ending work in process:
	Total costs accounted for

Requirement 5. What is the average cost per gallon transferred out of Fermenting into Packaging? Why would the company's managers want to know this cost?

First, identify the labels to compute the average cost per gallon transferred out, then compute the average cost per unit. (Abbreviation used: Avg. = Average. Enter your answer to two decimal places.)

				Avg. cost
	/		=	per gallon

/

=

Why would

SheltonShelton's

managers want to know this cost?

Managers will want to know this cost to compare it to their

budgeted target costs

cost per equivalent unit

direct material costs

. They may also use the cost information when

ordering more materials

paying for materials

setting selling prices

.

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