Problems with Average Method of Process Costing

Cost of Production Report — Average Method. The Bay City Chemical Company produces a chemical compound subsequently sold to oil refineries for use in the production of high-octane gasoline. Operations take place in two departments, Mixing and Blending. On March 1, 19—, the work in process inventories in the manufacturing departments showed:

                                                    Mixing       Blending
Cost in preceding department                          $10,620
Materials costs                            $3,300
Labor costs                                    750               1,550
Factory overhead                           375                   430
Number of units in process       1,500 liters         1,800 liters

In the Mixing Department in addition to the work in process inventory, 11,500 liters were placed in production. Of this amount 10,200 liters were completed and transferred to the Blending Department; 2,200 liters were partially complete (all materials had been added, but only one half of the labor and factory overhead had been applied); 600 liters were lost.

In the Blending Department 9,000 liters were completed and transferred to finished stock; 2,700 liters were still in process on which 40% of the labor and overhead had been applied; 300 liters were lost. 

The departmental reports showed the following costs for March :

                               Mixing            Blending
Materials              $52,500
Labor                     11,680            $16,090
Factory overhead     7,535                4,610

Required: A cost of production report for the month of March, using the average costing method.