Grand Lips produces a lip balm used for cold-weather sports. The balm is manufactured in a single processing department. No lip balm was in process on May 31, and Grand started production on 20,500 lip balm tubes during June. Direct materials are added at the beginning of the process, but conversion costs are incurred evenly throughout the process. Completed production for June totaled 15,300 units. The June 30 work in process was 30% of the way through the production process. Direct materials costing $4,305 were placed in production during June, and direct labor of $3,320 and manufacturing overhead of $1,738 were assigned to the process. Required:
a. Draw a time line for Great Lips.
b. use the time line to help you compute the total equivalent units and the cost per equivalent unit for June.
c. Assign total costs to (a) units completed and transferred to Finished Goods and (b) units still in process at June 30.
d. Prepare a T-account for Work in Process Inventory to show activity during June, including the June 30 balance.

a. see attachment

b.

total equivalent units : Materials = 30,500 units and Conversion Costs = 16,860

cost per equivalent unit : Materials = $0.14 and Conversion Costs = $0.30

c.

(a) units completed and transferred to Finished Goods = $6,732

(b) units still in process at June 30 = $1,196

d.

Journals

Work In Process :Direct Materials $4,305 (debit)

Raw Materials $4,305 (credit)

Being Raw Materials used in Production

Work In Process :Direct Labor  $3,320 (debit)

Salaries Payable $3,320  (credit)

Being Labor used in Production

Work In Process ; Overheads $1,738 (debit)

Overheads $1,738 (credit)

Being Overheads Assigned to Production

Finished Goods $6,732 (debit)

Work In Process $6,732 (credit)

Being Units transferred to Finished Goods

Explanation:

Calculation of Equivalent units of Production in respect with Raw Materials and Conversion Costs

1. Materials

Ending Work In Process (5,200 × 100%)                                         5,200

Completed and Transferred Out (15,300 × 100%)                         15,300

Equivalent units of Production in respect with Raw Materials     30,500

2. Conversion Costs

Ending Work In Process (5,200 × 30%)                                            1,560

Completed and Transferred Out (15,300 × 100%)                         15,300

Equivalent units of Production in respect with Conversion Cost 16,860

Calculation of Cost per Equivalent unit of production  in respect with Raw Materials and Conversion Costs

Unit Cost = Total Cost ÷ Total Equivalent units

1. Materials

Unit Cost =  $4,305 ÷ 30,500

                = $0.14

2. Conversion Costs

Unit Cost =  ($3,320 + $1,738) ÷ 16,860

                = $0.30

3. Total unit cost

Total unit cost = Material Cost + Conversion Cost

                        = $0.14 + $0.30

                        = $0.44

Calculation of costs assigned to (a) units completed and transferred to Finished Goods and (b) units still in process at June 30.

(a) units completed and transferred to Finished Goods

Total Cost = units completed and transferred out × total unit cost

                 = 15,300 × $0.44

                 = $6,732

(b) units still in process at June 30.

Total Cost = Materials Cost + Conversion Cost

                 = $0.14 × 5,200 + $0.30 × 1,560

                 = $1,196

the definition of a small business is an independently owned and operated company that is limited in size and in revenue depending on the industry. a local bakery that employs 10 people is an example of a small business. a manufacturing facility that employees less than 500 people is an example of a small business.