Exercise 18.9 is an extension of Exercise 18.8.

 

Dahl’s Treats uses one gallon of mix for each cake produced by the Baking Department. On August 1, the Baking Department had 500 cakes in process. These units were 100 percent complete with respect to batter transferred in from the Mixing Department during July, but only 70 percent complete with respect to direct (frosting) materials, and 80 percent complete with respect to conversion. Costs applied to these units carried forward from July totaled $2,600. Costs incurred by the Baking Department during August included $8,040 of direct materials and $31,900 of conversion. The ending inventory in the Baking Department on August 31 consisted of 300 cakes in process. These units were 100 percent complete with respect to batter transferred in from the Mixing Department, but only 30 percent complete with respect to direct (frosting) materials, and 25 percent complete with respect to conversion.

 

a.      Compute how many cakes were started in the Baking Department during August.

 

b.      Prepare a schedule showing: (1) cakes transferred out of the Baking Department in August, and (2) cakes started and completed by the Baking Department in August.

 

c.      Compute the equivalent units of input resources for the Baking Department in August.

 

d.      Compute the cost per equivalent unit of input resource for the Baking Department in August.

 

 

 

e.      Prepare the summary journal entry required to transfer the cost of baked cakes from the Baking Department’s Work in Process Inventory to the company’s Finished Goods Inventory in August.

 

f.      Compute the total cost assigned to the Baking Department’s ending inventory in process on August 31.