Question

Cost of Production Report 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, 10,800 units, 60% completed $107,136* * Direct materials (10,800 x $8) $86,400 Conversion (10,800 X 60% X $3.2) 20,736 $107,136 Materials added during January from Weaving Department, 166,400 units $1,347,840 243,718 Direct labor for January Factory overhead for January 297,878 Goods finished during January (includes goods in process, January 1), 168,400 units Work in process, January 31, 8,800 units, 25% completed a. Prepare a cost of production report for the Cutting Department. If an amount is zero or a blank, enter in "O". 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:

Answer 1

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Karachi Carpet Company
Answer a
As nothing is mentioned so I am assuming that FIFO method is used.
Cutting Department
Cost of Production Report-cutting Department
For the Month Ended Jan 31		Equivalent Units
Unit information	Physical Units	Materials	Conversion
Units charged to production:
Inventory in process Jan 1	10,800.00
Direct materials received	166,400.00
Total units accounted for by the cutting Department	177,200.00				Started and completed in Jan
					Goods transferred out in Jan	168,400.00
Units to be assigned costs:					Less: Opening work in process	10,800.00
Inventory in process Jan 1	10,800.00	-	4,320.00	Materials are introduced in the beginning so 100% is already completed for materials. So in this month 0% is completed. So Equivalent units are calculated as 10,800 * 0%. Similarly 60% is already completed for conversion. So in this month 40% is completed. So Equivalent units are calculated as 10,800 * 60%.	Started and completed in Jan	157,600.00	B
Started and completed in Jan	157,600.00	157,600.00	157,600.00	See note B
Goods transferred out in Jan	168,400.00	157,600.00	161,920.00
Inventory in process, Jan 31	8,800.00	8,800.00	2,200.00	This is closing units multiplied by % of completion
Total units to be assigned costs:	177,200.00	166,400.00	164,120.00
Cost Information				Total
Costs per equivalent unit
Total costs for Jan in cutting Department		1,347,840.00	541,596.00
Total equivalent units		166,400.00	164,120.00
Cost per equivalent unit		8.10	3.30
Costs assigned to production:
Inventory in process, Jan 1		86,400.00	20,736.00	107,136.00
Costs incurred in Jan		1,347,840.00	541,596.00	1,889,436.00
Total costs accounted for by the cutting Department				1,996,572.00
Costs allocated to completed and partially completed units
Inventory in process, Jan 1 balance		86,400.00	20,736.00	107,136.00
To complete inventory in process, Jan 1		-	14,256.00	14,256.00
Cost of completed Jan 1 work in process		86,400.00	34,992.00	121,392.00
Started and completed in Jan		1,276,560.00	520,080.00	1,796,640.00
Transferred to next Department in Jan				1,918,032.00
Inventory in process, Jan 31		71,280.00	7,260.00	78,540.00
Total costs assigned by the cutting Department				1,996,572.00

Answer b
Calculation of beginning Costs per equivalent unit	Physical Units	Materials	Conversion
Inventory in process Jan 1	10,800.00	10,800.00	6,480.00
Costs		86,400.00	20,736.00
Beginning Costs per equivalent unit		8.00	3.20
Answer b		Materials
Beginning Costs per equivalent unit		8.00
Costs per equivalent unit for Jan		8.10
Increase by		0.10
Answer b		Conversion
Beginning Costs per equivalent unit		3.20
Costs per equivalent unit for Jan		3.30
Increase by		0.10