Question

17-3B

PR 17-3B Equivalent units and related costs; cost of production report; entries Obj. 2, 3, 4 Dover Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling departments, emerging as finished chemicals. EXCEL TEMPLATE The balance in the account Work in Process-Filling was as follows on January 1: Work in Process-Filling Department (3.400 units, 60% completed): Direct materials (3,400 x 59.58) Conversion (3,400 X 60% x $3.90) $32,572 7,956 $40,528 The following costs were charged to Work in Process-Filling during January: Direct materials transferred from Reaction Department: 52,300 units at $9.50 a unit Direct labor Factory overhead $496,850 101,560 95,166 During January, 53,000 units of specialty chemicals were completed. Work in Process- Filling Department on January 31 was 2,700 units, 30% completed.

Answer 1

Computation of cost of production report- filing department:

		Equivalent Units
Units	Whole units	Direct materials	Conversion
Units charged to production:
Inventory in process, january 1	3,400
Received from reaction department	52,300
Total units accounted for by the filling departments	55,700
Units to be assigned cost:
Inventory in process January 1(60% completed)	3,400	0	(3,400 * 40%) =1360
Started and completed in january	(53,200-2,700) = 49,600	49,600	49,600
Transferred to finished goods in january	53,000	49,600	50,960
Inventory in process january 31(30% completed)	2,700	2,700	(2,700 * 30%) = 810
Total units to be assigned cost	55,700	52,300	51,770
Costs:	Direct material	conversion	Total
Cost per equivalent unit:
Total costs for january in filling department = a	$496,850	(101,560 + 95,166) = $1,967,261
Total equivalent units= b	52,300	51,770
Cost per equivalent unit	$9.50	$38.00
Costs charged to production:
Inventory in process, January 1			$40,528
Costs incurred in January			(496,850 + 101,560 + 95,166) = 693,576
Total costs accounted for by the filling department			$734,104
Cost allocated to completed and partially completed units:
Inventory in process, January 1 balance			$40,528
To complete inventory in process, January 1	0	(1,360 * 3.8) = 5,168	5168
Cost of completed January 1 work in process			$45,696
Started and completed in January	(49,600 * 9.5) = 471,200	(49,600 * 3.8) = 188,480	659,680
Transferred to finished goods in January			$705,376
Inventory in process, January 31	(2,700 * 9.5) = 25,650	(810 * 3.8) = 3,078	28,728
Total costs assigned by the filling department			$734,104

2. Journal Entries:

Account title	Debit	Credit
Work in process filling department to work in process reaction department	496,850	496,850
Finished Goods work in process filling department	705,376	705,376

3. Determining the increase or decrease in cost per equivalent unit:

Direct materials= $9.50 - $9.58 =$0.08 decrease conversion=$3.80 - $3.90=$0.10 decrease