Question

Hana Coffee Company roasts and packs coffee beans. The process begins by placing coffee beans into the Roasting Department. From the Roasting Department, coffee beans are then transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at July 31:

ACCOUNT Work in Process—Roasting Department							ACCOUNT NO.
Date		Item	Debit		Credit		Balance
							Debit		Credit
July	1	Bal., 5,600 units, 2/5 completed					8,960
	31	Direct materials, 252,000 units	378,000				386,960
	31	Direct labor	80,600				467,560
	31	Factory overhead	20,200				487,760
	31	Goods transferred, 252,000 units			?
	31	Bal., ? units, 2/5 completed					?

Required:

1. Prepare a cost of production report, and identify the missing amounts for Work in Process—Roasting Department. If an amount is zero, enter "0". When computing cost per equivalent units, round to two decimal places.

Hana Coffee Company
Cost of Production Report-Roasting Department
For the Month Ended July 31
Unit Information
Units charged to production:
Inventory in process, July 1
Received from materials storeroom
Total units accounted for by the Roasting Department
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, July 1
Started and completed in July
Transferred to Packing Department in July
Inventory in process, July 31
Total units to be assigned costs
Cost Information
Cost per equivalent unit:
		Direct Materials	Conversion
Total costs for July in Roasting Department		$	$
Total equivalent units
Cost per equivalent unit		$	$
Costs assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, July 1			$
Costs incurred in July
Total costs accounted for by the Roasting Department			$
Costs allocated to completed and partially completed units:
Inventory in process, July 1 balance			$
To complete inventory in process, July 1	$	$
Cost of completed July 1 work in process			$
Started and completed in July
Transferred to Molding Department in July			$
Inventory in process, July 31
Total costs assigned by the Roasting Department			$

2. Assuming that the July 1 work in process inventory includes $7,840 of direct materials, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between February and July. If required, round your answers to the nearest cent.

	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit		$
Change in conversion cost per equivalent unit		$

Answer 1

Hana Coffee Company
Cost of Production Report-Roasting Department
For the Month Ended July 31
Unit Information
Units charged to production:
Inventory in process, July 1			5600
Received from materials storeroom			252000
Total units accounted for by the Roasting Department			257600
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, July 1	5600	0	3360
Started and completed in July	246400	246400	246400
Transferred to Packing Department in July	252000	246400	249760
Inventory in process, July 31	5600	5600	2240
Total units to be assigned costs	257600	252000	252000
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for July in Roasting Department		378000	100800
Total equivalent units		252000	252000
Cost per equivalent unit		1.50	0.40
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, July 1			8960
Costs incurred in July			478800
Total costs accounted for by the Roasting Department			487760
Cost allocated to completed and partially completed units:
Inventory in process, July 1 balance			8960
To complete inventory in process, July 1	0	1344	1344
Cost of completed July 1 work in process			10304
Started and completed in July	369600	98560	468160
Transferred to Molding Department in July			478464
Inventory in process, July 31	8400	896	9296
Total costs assigned by the Roasting Department			487760
2
	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Increase	0.10		=1.5-(7840/5600)
Change in conversion cost per equivalent unit	Decrease	0.10		=0.4-((8960-5600*1.4)/(5600*2/5))