Health Beverage Corporation uses a process costing system to collect costs related to the production of its celery flavored cola. The cola is first processed in a Mixing Department at Health and is then transferred out and finished up in the Bottling Department. The finished cases of cola are then transferred to Finished Goods Inventory. The following information relates to Health's two departments for the month of January: How many cases of cola were completed and transferred to Finished Goods Inventory during January?

Question

Health Beverage Corporation uses a process costing system to collect costs related to the production of its celery flavored cola. The cola is first processed in a Mixing Department at Health and is then transferred out and finished up in the Bottling Department. The finished cases of cola are then transferred to Finished Goods Inventory. The following information relates to Health's two departments for the month of January:  How many cases of cola were completed and transferred to Finished Goods Inventory during January?

Quizplus · Accepted Answer

We can determine the number of cases of cola completed and transferred to Finished Goods Inventory by looking at the units accounted for in the Mixing Department and Bottling Department. In the Mixing Department, 75,000 liters of celery flavoring were added to 600,000 liters of cola syrup to create a total of 675,000 liters of product. In the Bottling Department, 660,000 liters of the product were bottled and transferred out, leaving 15,000 liters in ending WIP. We can calculate the number of cases of cola by dividing the 660,000 liters bottled by the 10 liters per case ratio, which equals 66,000 cases. However, we need to add the 6,000 cases in ending WIP from the Mixing Department to get the total number of cases completed and transferred to Finished Goods Inventory, which equals 72,000 cases. Therefore, the correct answer is C) 72,000.

Health Beverage Corporation Uses a Process Costing System to Collect