90.2K

Verified Solution

Link Copied!

You Can Paint Too prepares and packages paint products. You Can Paint Too has two departments: Blending and Packaging. Direct materials are added at the beginning of the blending process (dyes) and at the end of the packaging process (cans). Data from the month of May for the Blending Department are as follows: (Click the icon to view the data from May.) You Can Paint Too completed the following production cost report for its Blending Department for the month of May: 5/(Click the icon to view the assignment of costs.) Conversion costs are added evenly throughout each process. The company uses the weighted average method. Read the requirements. Requirement 1. Prepare the journal entries to record the assignment of direct materials and direct labor and the allocation of manufacturing overhead to the Blending Department. Also, prepare the journal entry to record the costs of the gallons completed and transferred out to the Packaging Department. Assume labor costs are accrued and not yet paid. (Record debits first, then credits. Exclude explanations from any journal entries.) Begin with the summary journal entry to record the assignment of direct materials and direct labor and the allocation of manufacturing overhead to the Blending Department. Date Accounts Debit Credit May 31 Requirement 2. Post the journal entries to the Work-in-Process InventoryBlending T-account. What is the ending balance? Post the entries using the appropriate descriptions as posting references. Denote the ending balance as "Bal." Work-in-Process InventoryBlending Beg. Bal. Requirement 3. What is the average cost per gallon transferred out of the Blending Department into the Packaging Department? Why would the company managers want to know this cost? Determine the formula, then enter the amounts to calculate the average cost per gallon transferred out of the Blending Department. (Round your answer to the nearest cent.) = Average cost per gallon Why would the company managers want to know this cost? O A. Managers would compare the average cost per gallon against their budgeted costs to determine whether the costs of the blending process remain under control. If budgeted costs are higher than the actual average cost per gallon, then the managers have done a good job controlling costs. In contrast, if the budgeted costs are lower than the actual average cost per gallon, managers will investigate the reason for the higher-than-expected costs in an effort to regain control over costs. O B. Managers use the cost per gallon for external financial reporting-specifically to calculate the ending inventory balances on the Balance Sheet. OC. Managers use the cost per gallon for external financial reportingspecifically to calculate the cost of Goods Sold on the Income Statement. OD. All of the above are reasons why management would be interested in this cost per unit for gallons completed and transferred out to Finished Goods Inventory. Gallons 0 gallons 9,500 gallons 6,000 gallons 3,500 gallons Beginning Work-in-Process Inventory Started in production Completed and transferred out to Packaging in May Ending Work-in-Process Inventory (30% of the way through the blending process) Costs Beginning Work-in-Process Inventory Costs added during May: Direct materials $ 0 5,700 Direct labor 2,085 Manufacturing overhead allocated 2,004 $ 9,789 Total costs added during May You Can Paint Too Production Cost Report - Blending Department (Partial) Month Ended May 31 Direct Conversion Total COSTS Materials Costs Costs Costs to account for: Beginning work-in-process 0 $ 0 $ 5,700 4,089 9.789 Costs added during the period Total costs to account for 9,789 5,700 9,500 4,089 7,050 Divided by: Total EUP 0.60 $ 0.58 Cost per equivalent unit Costs accounted for: Completed and transferred out 3,600 $ 2,100 3,480 $ 609 7,080 2,709 Ending work-in-process 5,700 $ 4,089 $ 9,789 Total costs accounted for A Requirements 1. Prepare the journal entries to record the assignment of direct materials and direct labor and the allocation of manufacturing overhead to the Blending Department. Also, prepare the journal entry to record the costs of the gallons completed and transferred out to the Packaging Department. Assume labor costs are accrued and not yet paid. 2. Post the journal entries to the Work-in-Process InventoryBlending T-account. What is the ending balance? 3. What is the average cost per gallon transferred out of the Blending Department into the Packaging Department? Why would the company managers want to know this cost

Answer & Explanation Solved by verified expert

See Answer