Bay Manufacturing produces paint. The company has two processes: mixing and packaging. The ingredients for the paint are mixed in large batches and then transferred to the packaging department, where one-gallon cans are filled, capped, labeled, and boxed.
There was no work in process on February 1. The materials are all brought to the packaging department up front and charged to the job. Nothing is transferred to finished goods until the entire job is complete. The materials costs include the packaging, material, and the cost transferred from the mixing department.
On February 2, 15,000 gallons (job 2-1) were transferred into the packaging department from the mixing department and completed on February 19.
The costs incurred to complete job 2-1 in the packaging department are as follows:
| Materials |
$56,250 |
| Labor |
11,250 |
| Overhead (applied based on direct labor hours) |
7,500 |
On February 20, another 20,000 gallons (job 2-2) were transferred into the packaging department. Job 2-2 was 50% complete as to labor at the end of the month.
The costs incurred (unit cost unchanged from job 2-1) to complete job 2-2 in the packaging department are as follows:
| Materials |
$75,000 |
| Labor |
15,000 |
| Overhead (applied based on direct labor hours) |
10,000 |