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Brian Canning Co

Accounting

Brian Canning Co., which sells canned corn, uses an operation costing system. Cans of corn are classified as either sweet or regular, depending on the type of corn used. Both types of corn go through the separating and cleaning operations, but only regular corn goes through the creaming operation. During January, two batches of corn were canned from start to finish. Batch X consisted of 1,150 pounds of sweet corn, and Batch Y consisted of 1,050 pounds of regular corn. The company had no beginning or ending Work-in-Process Inventory. The following cost information is for the month of January:

 

 BatchCostBatch SizeRaw sweet corn X $7,878  1,150lbs Raw regular corn Y  4,043* 1,050lbs Separating department costs    2,970     Cleaning department costs    2,090     Creaming department costs    315     

 

*Includes $1,000 for cream.

 

Required:

1. Compute the unit cost for sweet corn and regular corn.

2. Record appropriate journal entries.

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Computation of Unit Cost for Sweet Corn and Regular Corn:    
Raw sweet corn = ($7878/1150) = $ 6.85    
Raw regular corn = ($4043/1050) = $ 3.85    
       
Total pounds for Separating and Cleaning dept = (1150+1050) = 2,200
Total pounds for creaming dept = 1,050    
       
Separating department cost = (2970/2200) = $ 1.35    
Cleaning department cost = (2090/2200) = $ 0.95    
Creaming department cost = (315/2200) = $ 0.14    
       
Total product cost per pound :-      
Sweet corn = (6.85+1.35+0.95) = $9.15    
Regular corn = (3.85+1.35+0.95+0.14) = 6.29

 

 
Transaction General Journal Debit Credit
A WIP Inventory: Separation Department 10921  
  Direct Materials Inventory (7878+4043-1000)   10921
  (To record the requisition of the raw corn for both types less the cream cost)    
B. WIP Inventory: Separation Department 2970  
  Conversion Costs Applied   2970
  (To record the application of conversion costs to the Separation Department)    
C. WIP Inventory: Cleaning Department 13891  
  WIP Inventory: Separation Department (10921+2970)   13891
  (To record the transfer both types of corn to the Cleaning Department)    
D. WIP Inventory: Cleaning Department 2090  
  Conversion Costs Applied   2090
  (To record the application of conversion cost to the Cleaning Department)    
E. WIP Inventory: Creaming Department (4043-1000+(1.35*1050)+(0.95*1050)) 5458  
  Finished Goods Inventory (7878+(1.35*1150)+(0.95*1150)) 10523  
  WIP Inventory: Cleaning Department    15981
  (To record the transfer the Regular Corn to the Creaming Department and the Sweet Corn to Finished Goods Inventory)    
F. WIP Inventory: Creaming Department 1315  
  Direct Materials Inventory   1000
  Conversion Costs Applied   315
  (To record the transfer cream costs and conversion cost to the Creaming Department)    

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