Question

Cold Spring produces premium bottle water. Cold Spring purchases artesian water, stores the water in large tanks, and then runs the water through 2 processess; filtration and bottling. During February, the filtration proces incurred the following costs inprocessing 190,000 liters:
Wages of workers operating the filtration equipment- $21,950

Manufacturing overhead allocated to filtration- $25,050

Water-$ 150,000

Cold Spring had no beginning inventory in the filtration department in february.Â

Requirements:

R1)Compute the February Conversion costs in the filtration department.

R2)The filtration department completely processed 190,000 liters in February. What was the filtration cost per liter?

Answer 1

Answer:

R1. $47,000

R2. $1.04 per liter

Explanation:

Given that,

Wages of workers operating the filtration equipment = $21,950

Manufacturing overhead allocated to filtration = $25,050

Water = $ 150,000

R1. February Conversion costs in the filtration department:

= Direct labor costs + Manufacturing overhead

= $21,950 + $25,050

= $47,000

R2. Filtration cost per liter:

= Total cost incurred ÷ Total units processed

= ($21,950 + $25,050 + $ 150,000) ÷ 190,000

= $197,000 ÷ 190,000

= $1.036 or $1.04 per liter