Venus Chocolate Company processes chocolate into candy bars

PR 20-2A Venus Chocolate Company processes chocolate into candy bars. The process begins by placing direct materials (raw chocolate, milk, and sugar) into the Blending Department. All materials are placed into production at the beginning of the blending process. After blending, the milk chocolate is then transferred to the Molding Department, where the milk chocolate is formed into candy bars. The following is a partial work in process account of the Blending Department at January 31, 2010:

Account Work In Process--Blending Department ACCT NO.
Date Item debit credit Balance Jan. Debit Credit

1 Bal.,6,000 units, % completed 21,840

31 Direct Materials,240,000 units 768,000(debit) 789,840
31 Direct Labor 153,200(debit) 943,040
31 Factory Overhead 38,160(debit) 981,200
31 Goods transferred, 242,000units ?(credit)
31 Bal.,?units,1/5 completed ?

INSTRUCTIONS:
1. Prepare a cost of production report, and identify the missing amounts for Work in Process - Blending Department.
2. Assuming that the January 1 work in process inventory includes direct materials of $18,600, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between December and January.


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Herschel Candy Co. produces a single product: chocolate almond bar that sells for $0.40 per bar

Herschel Candy Co. produces a single product: chocolate almond bar that sells for $0.40 per bar. Variable costs for each bar (sugar, chocolate, almonds, wrapper and labor) total $0.25. Total Mo. Fixed costs are $60,000. Last month, bar sales reached 1 million. Herschel's President wants to increase company's profitability by following options:
1) increase advertising
2) Increase quality of bar's ingredients and simultaneously increase selling price
3) Increase selling price with no change in ingredients

a) Sales mgr. is confident intensive advertising campaign will double sales volume. If co.'s president goal is to increase this month's profits by 50% over last month's, what is max. amt. that can be spent on advertising that doubles sales volume?
b) Assume company increases quality of ingredients, thus increasing variable costs to $.30 per bar. By how much must selling price per unit be increased to maintain same breakeven point in units?
c) Assume next that company has decided to increase its selling price to $0.50 per bar with no change in advertising or ingredients. Compute sales volume in units that would be needed at new price for company to earn same profit as it earned last month.

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