Reference no: EM131769611

The Shannon Paint Company prepares and packages paint products. The company has two departments: (1) Blending and (2) Packaging. Direct materials are added at the beginning of the blending process (dyes) and at the end of the packaging process (cans). Conversion costs are added evenly throughout each process. Data from the month of May for the Blending Department are as follows:

Gallons:

Beginning work in process inventory

Started production

8,200 gallons

Completed and transferred out to Packaging in May

6,100 gallons

Ending work in process inventory (40% of the way through the blending process)

2,100 gallons

Costs:

Beginning work in process inventory

Costs added during May:

Direct materials (dyes)

$5,166

Direct labor

600

Manufacturing overhead

1,829

Total costs added during May

$7,595

Requirements

1. Fill in the time line for the Blending Department.

2. Summarize the physical flow of units and compute total equivalent units for direct materials and for conversion costs.

3. Summarize total costs to account for and find the cost per equivalent unit for direct materials and for conversion costs.

4. Assign total costs to units (gallons):

a. Completed and transferred out to the Packaging Department

b. In the Blending Department ending work in process inventory

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