Question

B. Cum version from the pici Obj. 2,4 the following data for EX 17-17 Cost of production report The Cutting Department of Karachi Carpet Company provides the fol January. Assume that all materials are added at the beginning of the process ✓ Conversion cost per equivalent unit $5.10 Work in process, January 1, 1,400 units, 75% completed "Direct materials (1,400 x $12.65) Conversion (1,400 x 75% x 55.00) $ 22,960 $ 17,710 5,250 $22,960 $742,400 Materials added during January from Weaving Department, 58,000 units 134,550 Direct labor for January 151,611 Factory overhead for January Goods finished during January (includes goods in process, January 1), 56,200 units Work in process, January 31, 3,200 units, 30% completed A. Prepare a cost of production report for the Cutting Department. B. Compute and evaluate the change in the costs per equivalent unit for direct materials and conversion from the previous month (December).

Answer 1

A)

KARACHI CARPET COMPANY COST OF PRODUCTION REPORT-CUTTING DEPARTMENT FOR THE MONTH DEPARTMENT OF JANUARY 31
Units charged to production
Inventory in process ,Jan 1			1400
Received from weaving department			58000
Total units accounted for cutting department			59400
	WHOLE UNITS	EQUIVALENT UNITS
		MATERIAL	CONVERSION
Inventory in process,Jan1	1400	0	1400(1-.75)= 350
Started and completed (56200-1400)	54800	54800	54800
Inventory in process ,Jan 31	3200	3200*100%=3200	3200*30%= 960
Total units to be assigned cost	59400	58000	56110
Cost per equivalent unit
		MATERIAL	CONVERSION
Total cost for January		742400	134550+151611=286161
Total equivalent units		58000	56110
Cost per equivalent unit		742400/58000= 12.80	286161/56110= 5.10
Cost accounted for
	Direct material	Conversion	Total
Inventory in process ,Jan 1			22960
Cost incurred in Jan			1051521
The total cost accounted for by the cutting department			1051521
Cost allocated to units completed and in process at end
Inventory in process on Jan 1	17710	5250	22960
To complete inventory in process Jan 1	0	350*5.10= 1785	1785
cost of started and completed	54800*12.80= 701440	54800*5.1= 279480	980920
Transferred to finished goods inventory during Jan			1005665
Inventory in process Jan 31	3200*12.80= 40960	960*5.1= 4896	45856
Total cost assigned by cutting department			1051521

B)

	Increase/(decrease)	Amount
Change in direct material cost per equivalent unit	Increase	12.80-12.65 = .15 per equivalent unit
Change in conversion cost per equivalent unit	Increase	5.1 -5 =$ .10 per equivalent unit