Question

The Cutting Department of Karachi Carpet Company provides the following data for January. Assume that all materials are added at the beginning of the process.

Work in process, January 1, 7,400 units, 60% completed $92,204*

*Direct materials (7,400 × $10.6) $78,440

Conversion (7,400 × 60% × $3.1) 13,764 $92,204

Materials added during January from Weaving Department, 114,000 units $1,214,100

Direct labor for January 152,631

Factory overhead for January 186,549

Goods finished during January (includes goods in process, January 1), 115,400 units —

Work in process, January 31, 6,000 units, 35% completed —

a. Prepare a cost of production report for the Cutting Department. If an amount is zero or a blank, enter in "0". For the cost per equivalent unit computations, round your answers to two decimal places.

Karachi Carpet Company Cost of Production Report-Cutting Department For the Month Ended January 31

Unit Information

Units charged to production:

Inventory in process, January 1 (______)

Received from Weaving Department (______)

Total units accounted for by the Cutting Department (______)

Units to be assigned costs: Equivalent Units

Whole Units Direct Material Conversion

Inventory in process, January 1 (_______). (________). (_______)

Started and completed in January (_______). (________). (_______)

Transferred to finished goods in January   (_______). (________). (_______)

Inventory in process, January 31 (_______). (________). (_______)

Total units to be assigned cost (_______). (________). (_______)

Cost Information

Cost per equivalent unit:

Direct Materials Conversion

Total costs for January in Cutting Department $ (_____) $ (_______)

Total equivalent units (_____) (________)

Cost per equivalent unit $ (_____) $ (______)

Costs assigned to production:

Direct Materials Conversion Total

Inventory in process, January 1 $ (_______)

Costs incurred in January (________)

Total costs accounted for by the Cutting Department $ (______)

Costs allocated to completed and partially completed units:

Inventory in process, January 1 balance $ (______)

To complete inventory in process, January 1    $ (___) $ (___)

Cost of completed January 1 work in process $ (_______)

Started and completed in January $ (____) (____) (______)

Transferred to finished goods in January $ (______)

Inventory in process, January 31 (______) (_______) (_________)

Total costs assigned by the Cutting Department $ (_______)

b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (December). If required, round your answers to two decimal places.

Increase or Decrease Amount

Change in direct materials cost per equivalent unit Increase $ (_____)

Change in conversion cost per equivalent unit Decrease $ (_____)

Answer 1

Solution a:

Karachi Carpet Company
Cost of Production Report - Cutting Department
For the Month Ended January 31
Unit Information
Units charged to production:
Inventory in process, January 1			7400
Received from Weaving Department			114000
Total units accounted for by the Cutting Department			121400
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials (1)	Conversion (1)
Inventory in process, January 1	7400	0	2960
Started and completed in January	108000	108000	108000
Transferred to finished goods in January	115400	108000	110960
Inventory in process, January 31	6000	6000	2100
Total units to be assigned costs	121400	114000	113060
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for January in Cutting Department		$1,214,100.00	$339,180.00
Total equivalent units		114000	113060
Cost per equivalent unit (2)		$10.65	$3.00
Costs assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, January 1	$78,440.00	$13,764.00	$92,204.00
Costs incurred in January	$1,214,100.00	$339,180.00	$1,553,280.00
Total costs accounted for by the Cutting Department	$1,292,540.00	$352,944.00	$1,645,484.00
Costs allocated to completed and partially completed units:
Inventory in process, January 1 balance	$78,440.00	$13,764.00	$92,204.00
To complete inventory in process, January 1	$0.00	$8,880.00	$8,880.00
Cost of completed January 1 work in process	$78,440.00	$22,644.00	$101,084.00
Started and completed in January	$1,150,200.00	$324,000.00	$1,474,200.00
Transferred to finished goods in Janaury (3)	$1,228,640.00	$346,644.00	$1,575,284.00
Inventory in process, January 31 (4)	$63,900.00	$6,300.00	$70,200.00
Total costs assigned by the Cutting Department	$1,292,540.00	$352,944.00	$1,645,484.00

Solution b:

Particulars	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit ($10.65 - $10.60)	Increase	$0.05
Change in conversion cost per equivalent unit ($3.00 - $3.10)	Decrease	$0.10