Question

Go to pg. 877 lį AA PR 17-3A Equivalent units and related costs; cost of production report; entries Obj. 2, 3, 4 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. EXCEL TEMPLATE The balance in the account Work in Process—Sifting Department was as follows on July 1: Work in Process—Sifting Department (900 units, scompleted): Direct materials (900 x $2.05) $1,845 Conversion (900 x x $0.40) 216 $2,061 The following costs were charged to Work in Process—Sifting Department during July: Direct materials transferred from Milling Department: 15,700 units at $2.15 a unit Direct labor Factory overhead $33,755 4,420 2,708 During July, 15,500 units of flour were completed. Work in Process—Sifting Department on July 31 was 1,100 units, ºs completed. Instructions

Answer 1

Solution 1:
White Diamond Flour Company
Sifting Department
Computation of Equivalent unit (FIFO)
Particulars	Physical units	Material	Conversion
Units to be accounted for:
Beginning WIP Inventory	900
Units started this period	15700
Total unit to be accounted for	16600
Units Accounted for:
Units completed and transferred out
From beginning inventory Material - 0% Conversion - 2/5	900	0	360
Started and completed currently	14600	14600	14600
Units in ending WIP Material - 100% Conversion - 4/5	1100	1100	880
Total units accounted for	16600	15700	15840

White Diamond Flour Company
Sifting Department
Computation of Cost per Equivalent unit
Particulars	Total cost	Material	Conversion
Current period cost	$40,883.00	$33,755.00	$7,128.00
Equivalent units		15700	15840
Cost per equivalent unit		$2.15	$0.45

White Diamond Flour Company
Sifting Department
Producton cost report - FIFO
Particulars	Total cost	Material	Conversion
Cost Accounted for :
Cost assigned to unit transferred out:
Cost from beginning WIP Inventory	$2,061	$1,845	$216
Current cost added to complete beginning WIP:
Material	$0	$0
Conversion (360 * $0.45)	$162		$162
Total Cost from beginning inventory	$2,223	$1,845	$378
Current cost of unit started and completed:
Material (14600*$2.15)	$31,390	$31,390
Conversion (14600*$0.45)	$6,570		$6,570
Total cost of unit started and completed	$37,960	$31,390	$6,570
Total cost of unit transferred out	$40,183	$33,235	$6,948
Cost assigned to ending WIP:
Material (1100*$2.15)	$2,365	$2,365
Conversion (880*$0.55)	$396		$396
Total ending WIP inventory	$2,761	$2,365	$396
Total cost accounted for	$42,944	$35,600	$7,344

Solution 2:
Journal Entries - White Diamond Flour Company
Date	Particulars	Debit	Credit
July	Work In Process - Sifting Department Dr	$33,755.00
	To Work In Process - Milling Department		$33,755.00
	(Being cost transferred from milling to sifting department)
July	Work In Process - Packaging Department Dr	$40,183.00
	To Work In Process - Sifting Department		$40,183.00
	(Being cost transferred from sifting to packaging department)

Solution 3:
Particulars	Direct material	Conversion
Cost per equivalent unit:
From current period	$2.15	$0.45
From beginning period	$2.05	$0.40
Increase (decrease)	$0.10	$0.05

Solution 4:
The cost of production report may be used as the basis for allocating product costs between Units completed & Transferred and Units in ending WIP. 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. Any differences in unit product costs from one month to another, such as those in part (3), can be studied carefully and any significant differences investigated.