a. WIP, August 1, had 20,000 kilograms, 20 percent complete. Costs associated with partially completed units were — Silva Company produces variety stationery products One product

Da Silva Company produces a variety of stationery products. One product, sealing wax sticks, passes through two processes: blending and moulding. The weighted average method is used to account for the costs of production. After blending, the resulting product is sent to the moulding department, where it is poured into moulds and cooled. The following information relates to the blending process for August:

a. WIP, August 1, had 20,000 kilograms, 20 percent complete. Costs associated with partially completed units were:

Direct materials…………………………….$220,00

Direct labour………………………………...30,000

Overhead applied……………………………10,000

b. WIP, August 31, had 30,000 kilograms, 70 percent complete.

c. Units completed and transferred out totalled 500,000 kilograms. All inputs are added uniformly, and costs added during the month were:

Materials……………………………$5,610,000

Direct labour………………………...3,877,500

Overhead applied……………………1,292,500

Required:

1. Prepare (a) a physical flow schedule and (b) an equivalent unit schedule.

2. Calculate the unit cost, rounded to two decimal places.

3. Determine 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……………………….$120,000

Pigment………………………...100,000

The costs of the materials added during the month are also given:

Paraffin……………………….$3,060,000

Pigment………………………..2,550,000

Prepare an equivalent unit schedule with cost categories for each material. Calculate the cost per unit for each type of material.

SOLUTION

1. a. Physical flow schedule:

Units to account for: Units accounted for:

Units in BWIP 20,000 Units completed 500,000

Units started 510,000 From EWIP 30,000

Total units 530,000 Total units 530,000

b. Equivalent unit schedule: