1. HEALTHBLEND’S PICKING DEPT.: JULY COSTS Production Units in process July 1, 75% complete20,000 Units complete & transferred out50,000 Units in process July 31, 25% complete10,000 Costs Work in process, July 1$ 3,525 Cost added during July10,125 1 LO 5

2. PHYSICAL FLOW SCHEDULE: STEP 1 2 LO 5 EXHIBIT 6-15 Reconciling units to account for.

3. CALCULATE EFU: STEP 2 3 LO 5 EXHIBIT 6-14

4. COMPUTE UNIT COST: STEP 3 4 LO 5 Unit cost = $13,625 / 52,500 = $0.26 per EFU EXHIBIT 6-14

5. COMPUTE UNIT COST: STEP 4 5 LO 5 EXHIBIT 6-14 Unit cost = $13,625 / 52,500 = $0.26 per EFU Transferred out ($0.26 x 50,000 = $13,000 EWIP ($0.26 x 2,500) = 650 Total cost assigned = $13,650

6. COST RECONCILIATION: STEP 5 Total Manufacturing Costs Assigned Goods transferred out$ 13,000 Goods in ending WIP650 Total costs accounted for$ 13,650 Manufacturing Costs to Account For Beginning WIP$ 3,525 Incurred during the period10,125 Total costs to account for$ 13,650 6 LO 5

7. WEIGHTED AVERAGE: EVALUATION Major benefit  ? Major disadvantage  ? 7 LO 5 Simplicity Accuracy in computing unit costs for current period & for beginning WIP

8. NONUNIFORM INPUTS: DEFINITION 8 Occurs, for example, when direct materials are completely added at the beginning of process rather than throughout process. LO 6

9. NONUNIFORM INPUTS: EFU COMPUTATION 9 LO 6 EXHIBIT 6-19 Materials are 100%, added at beginning, but conversion costs only 40% complete.

10. HEALTHBLEND’S PICKING DEPT.: JULY COSTS Production Units in process July 1, 75% complete20,000 Units complete & transferred out50,000 Units in process July 31, 25% complete10,000 Costs Work in process, July 1$ 3,525 Cost added during July10,125 10 LO 7 Remember

11. CALCULATE FIFO EFU: STEP 2 11 LO 7 EXHIBIT 6-21

12. 12 How are transactions entered into the accounting system? Transactions are entered into accounting system by making journal entries & posting to accounts. LO 8

13. 13 THE END CHAPTER 6