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., 6,800 units, 3/5 completed 23,392 31 Direct materials, 306,000 units 918,000 941,392 31 Direct labor 194,600 1,135,992 31 Factory overhead 48,664 1,184,656 31 Goods transferred, 307,000 units ? 31 Bal., ? units, 1/5 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 $19,720 of direct materials, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between June 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

Solution 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			6800
Received from materials storeroom			306000
Total units accounted for by the Roasting Department			312800
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials (1)	Conversion (1)
Inventory in process, July 1	6800	0	2720
Started and completed in August	300200	300200	300200
Transferred to finished goods in August	307000	300200	302920
Inventory in process, July 31	5800	5800	1160
Total units to be assigned costs	312800	306000	304080
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for July in Roasting Department		$918,000.00	$243,264.00
Total equivalent units		306000	304080
Cost per equivalent unit (2)		$3.00	$0.80
Costs assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, July 1			$23,392.00
Costs incurred in July	$918,000.00	$243,264.00	$1,161,264.00
Total costs accounted for by the Roasting Department			$1,184,656.00
Costs allocated to completed and partially completed units:
Inventory in process, July 1 balance			$23,392.00
To complete inventory in process, July 1	$0.00	$2,176.00	$2,176.00
Cost of completed July 1 work in process			$25,568.00
Started and completed in July	$900,600.00	$240,160.00	$1,140,760.00
Transferred to finished goods in July (3)			$1,166,328.00
Inventory in process, July 31 (4)	$17,400.00	$928.00	$18,328.00
Total costs assigned by the Roasting Department			$1,184,656.00

Solution 2:

Particulars	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit ($3 - $2.90)	Increase	$0.10
Change in conversion cost per equivalent unit ($0.80 - $0.90)	Decrease	$0.10