Question

Instructions Chart of Accounts Cost of Production Report Journal Instructions White Diamond Flour Company manufactures flour by a series of three processes, beginning with wheat grain being introduced in the Milling Department. From the Milling Department, the materials pass through the Sifting and Packaging departments, emerging as packaged refined flour. The balance in the account Work in Process-Sifting Department was as follows on July 1: Work in Process-Sifting Department (700 units, 3/5 completed): Direct materials (700 * $2,35) $1,645 Conversion (700 * 3/5* $0.30) 126 $1.771

Answer 1

WHITE DIAMOND FLOUR COMPANY Cost of Production Report - Sifting Department For the Month Ended July 31 Unit Information Units charged to production: Inventory in proces, July 1 Transferred in from Milling Department 15,700 Total units accounted for by the Sifting department 16,400 700 Units to be assigned costs: Inventory in proces, July 1 Started and Completed in July Transferred to packing department in July Inventory in proces, July 31 Total units to be assigned costs Whole Units 700 14,400 15,100 1,300 16,400 Equivalent Units Transferred "Conversion In 0 280 14,400 14,400 14,400 14,680 1,300 1,040 15,700 15,720 Cost Information Conversion Total cost for July in Sifting department Total Equivalent units Cost per equivalent unit Transferred In $38,465 15,700 $2.45 $5,502 15,720 $0.35

Costs assigned to production: Transferred In Conversion Total $1,771 $43,967 $45,738 Inventory in proces, July 1 Costs transferred in from Milling department in July Total costs accounted for by the Sifting department Costs allocated to completed and partially completed units: Inventory in proces, July 1 To complete inventory in process, July 1 Cost of completed July 1 work in process Started and completed in July Transferred to Finished goods in July Inventory in proces, July 31 Total costs assigned by the Sifting department $98 $35,280 $5,040 $1,771 [Given] $98 [280 units x $0.35] $1,869 $40,320 (Ref: Workings] $42,189 $3,549 [Ref: Workings] $45,738 $3,185 $364 2) Event Credit Remarks and Workings Debit $43,967 a) General Journal Work in Process Inventory - Sifting Department Work in Process Inventory - Milling Department Finished Goods Inventory Work in Process Inventory - Sifting Department $43,967 (To record cost of goods transferred from Milling to Sifting Dept.) b) $42,189 $42,189 |(To record cost of goods trfd. from Sifting Dept. to finished goods) 3) Change in direct material cost per equivalent unit Change in conversion cost per equivalent unit Change Increase Increase Amount $0.10 $0.05 [Ref: Workings] [Ref: Workings]

4) The cost of production report may be used as the basis for allocating product costs between Work in Process and Transferred-Out. The report can also be used to control costs by holding each department head responsible for the units entering production and the costs incurred in the department.......... difference investigated. Workings: Under FIFO method, equivalent units would consist efforts required to complete the beginning inventory, efforts put for completed and transferred out goods and ending inventory. As the materials are introduced at the beginning itself, beginning inventory is 100% complete in terms of materials, 0% efforts would be required in current process or period whereas conversion costs would require the uncompleted portion of costs in current process or period. That is, it was complete 3/5 already and so 2/5th efforts would be required in current period. Units in beginning inventory Add: Units transferred in from milling dept. Less: Units completed and transferred out Units in ending inventory 700 15,700 (15,100) --> Of which 700 units shall be from beg. inventory; Bal. 14400 units from current. 1,300 % EUP- Conversion Conversion Equivalent Units of Production (EUP) % EUP- Particulars Whole Units Transferred Transferred in Beginning work in process 700 Started, Completed and transferred 14,400 100% 14,400 Transferred to next process 15,100 14,400 Ending work in process 1,300 100% 1,300 Equivalent Units of Production (EUP) | 16,400 15,700 2/5 100% [600 units x 0%; 600 units x 2/5] |[13,800 units x 100%; 13,800 units x 100%] 280 | 14,400 14,680 1,040 15,720 4/5 [1,600 units x 100%; 1,600 units x 4/5]

NOTE: As all the materials are transferred in at the beginning of the process, ending work in process inventory shall consist of 100% of transferred in for EUP calculation. Transferred Cost per equivalent units of production in Conversion [Under FIFO method, it shall not be considered here) [Conversion = $4,480 + $1,022 = $5,502] Cost of beginning work in process Cost transferred in from milling department Total Materials Costs & Conversion Costs Equivalent units of Production (EUP) Cost per Equivalent units of Production Cost per EUP - Previous period Change in EUP between the periods $38,465 $38,465 15,700 $2.45 $2.35 $0.10 Increase - $5,502 $5,502 15,720 $0.35 $0.30 $0.05 Increase [As computed EUP schedule presented above] [$38465 / 15700 units = $2.45; $5502 / 15720 units=$0.35] [Given] Transferred in = $2.45-$2.35=$0.10; Conversion=$0.35-$0.30=$0.05] Cost of goods completed & transferred EUP Cost per EUP Materials - Beginning cost Conversion - Beginning Cost Cost of goods completed & trfd from beginning Totals $1,645 [Given] $126 [Given] $1,771 Conversion - Current Cost to complete beginning WIP Materials - Current Cost Conversion - Current Cost to complete current units Cost of goods completed & trfd from current Total Cost of goods completed & transferred 280 14,400 14,400 $0.35 $2.45 $0.35 $98 [280 units x $0.35] $35,280 [14400 units x $2.45] $5,040 [14400 units x $0.35] $40,418 $42,189 ($1771 + $40418]

Cost of ending work-in-process EUP Totals Cost per EUP $2.45 $0.35 Materials Conversion Total cost of ending work-in-process 1,300 1,040 $3,185 [1300 units x $2.45] $364 [1040 units x $0.35] $3,549