Question

Cost of Production Report The debits to Work in Process-Roasting Department for Morning Brew Coffee Company for August, together with information concerning production, are as follows: Work in process, August 1, 1,200 pounds, 10% completed $4,740* *Direct materials (1,200 X $3.8) Conversion (1,200 X 10% X $1.5) $4,560 $180 $4,740 Coffee beans added during August, 38,000 pounds 142,500 60,928 Conversion costs during August Work in process, August 31, 2,000 pounds, 50% completed Goods finished during August, 37,200 pounds All direct materials are placed in process at the beginning of production. a. Prepare a cost of production report, presenting the following computations: 1. Direct materials and conversion equivalent units of production for August 2. Direct materials and conversion costs per equivalent unit for August 3. Cost of goods finished during August 4. Cost of work in process at August 31 If an amount is zero, enter in "0". For the cost per equivalent unit, round your answer to two decimal places.

Answer 1

a)

Morning Brew Coffee Company
Cost of Production Report- Roasting Department
For the Month Ended August 31
Unit Information
Units charged to production:
Inventory in process, August 1			1200
Received from materials storeroom			38000
Total units accounted for by the Roasting department			39200
Units to be assigned costs
	Equivalent Units
	Whole Units	Direct Materials (1)	Conversion (1)
Inventory in process, August 1	1200	0	(1200*90%)= 1080
Started and completed in August	(37200-1200)= 36000	36000	36000
Transferred to finished goods in august	37200	36000	37080
Inventory in process, August 31	2000	2000	(2000*50%)= 1000
Total units to be assigned costs	39200	38000	38080
Cost Information
Cost per equivalent unit:
		Direct materials	Conversion
Total costs for August in Roasting department		$142500	$60928
Total equivalent units		38000	38080
Cost per equivalent unit (2)		$3.75	$1.60
Cost assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, August 1			$4740
Costs incurred in August (142500+60928)			203428
Total costs accounted for by the Roasting department			$208168
Costs allocated to completed and partially completed units:
Inventory in process, August 1			$4740
To complete inventory in process, August 1	$0	(1080*$1.60)= $1728	1728
Cost of completed August 1 work in process			$6468
Started and completed in August	(36000*$3.75)= 135000	(36000*$1.60)= 57600	192600
Transferred to finished goods in August (3)			$199068
Inventory in process, August 31 (4)	(2000*$3.75)= 7500	(1000*$1.60)= 1600	9100
Total costs assigned by the Roasting department			$208168

b)

	Increase/Decrease	Amount
Change in direct materials cost per equivalent unit	Decrease	($3.80-3.75)= $0.05
Change in conversion cost per equivalent unit	Increase	($1.50-1.60)= $0.10