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, 7,800 units, 65% completed		$105,495*
*Direct materials (7,800 × $10.6)	$82,680
Conversion (7,800 × 65% × $4.5)	22,815
	$105,495
Materials added during January from Weaving Department, 120,000 units		$1,278,000
Direct labor for January		243,453
Factory overhead for January		297,553
Goods finished during January (includes goods in process, January 1), 121,400 units		—
Work in process, January 31, 6,400 units, 20% 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 Materials	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 costs
Cost Information
Costs 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			$
Cost 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 the costs 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		$
Change in conversion cost per equivalent unit		$

Answer 1

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			7800
Received from Weaving Department			120000
Total units accounted for by the Cutting Department			127800
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, January 1	7800	0	2730
Started and completed in January	113600	113600	113600
Transferred to finished goods in January	121400	113600	116330
Inventory in process, January 31	6400	6400	1280
Total units to be assigned costs	127800	120000	117610
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for January in Cutting Department		1278000	541006
Total equivalent units		120000	117610
Cost per equivalent unit		10.65	4.60
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, January 1			105495
Costs incurred in January			1819006
Total costs accounted for by the Cutting Department			1924501
Cost allocated to completed and partially completed units:
Inventory in process, January 1 balance			105495
To complete inventory in process, January 1	0	12558	12558
Cost of completed January 1 work in process			118053
Started and completed in January	1209840	522560	1732400
Transferred to finished goods in January			1850453
Inventory in process, January 31	68160	5888	74048
Total costs assigned by the Cutting Department			1924501
b
	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Increase	0.05	=10.65-10.6
Change in conversion cost per equivalent unit	Increase	0.10	=4.6-4.5