Reference no: EM13540755

WEIGHTED AVERAGE METHOD, TWO-DEPARTMENTANALYSIS, CHANGE IN OUTPUT MEASURE 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, 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	5 gallons	4,000 capsules
Costs:
Direct materials	$120	$32
Direct labor	$128	$20
Overhead	?	?
Transferred in	-	$140
Current production:
Transferred out	125 gallons	198,000 capsules
Ending inventory	6 gallons	6,000 capsules
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 weighted average method. Follow the five steps outlined in the chapter.

2. Prepare a production report for the tableting department. Follow the five steps outlined in the chapter.