Question

Cost of Production Report The Cutting Department of Karachi Carpet Company provides the following data for January. Assume that all materials are added at the beginning of the process. Work in process, January 1, 14,000 units, 75% completed $168,000* *Direct materials (14,000 x $7.80) $109,200 Conversion (14,000 x 75% * $5.60) 58,800 $168,000 Materials added during January from Weaving Department, 215,600 units $1,714,020 Direct labor for January 525,344 Factory overhead for January 642,086 Goods finished during January (includes goods in process, January 1), 218,200 units Work in process, January 31, 11,400 units, 40% completed a. Prepare a cost of production report for the Cutting Department. If an amount is zero or a blank, enter in "O". For the cost per equivalent unit computations, round your answers to two decimal places. Karachi Carpet Company Cost of Production Report-Cutting Department For the Month Ended January 31 Unit Information Units charged production: Inventory in process, January Received from Weaving Department Total units accounted for by the Cutting Department Units to be assigned costs: whole Units Equivalent Units Direct Materials Conversion

Answer 1

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Karachi Carpet Company
Started and completed in Jan
Goods transferred out in Jan	218,200.00
Less: Opening work in process	14,000.00
Started and completed in Jan	204,200.00

Answer a
Cost of Production Report-cutting Department
For the Month Ended Jan 31
Unit information
Units charged to production:	Physical Units
Inventory in process Jan 1	14,000.00
Direct materials received	215,600.00
Total units accounted for by the cutting Department	229,600.00

		Equivalent Units
Units to be assigned costs:	Physical Units	Materials	Conversion
Inventory in process Jan 1	14,000.00	-	3,500.00	Materials are introduced in the beginning so 100% is already completed for materials. So in this month 0% is completed. So Equivalent units are calculated as 14,000 * 0%. Similarly 75% is already completed for conversion. So in this month 25% is completed. So Equivalent units are calculated as 14,000 * 25%.
Started and completed in Jan	204,200.00	204,200.00	204,200.00	See note B
Goods transferred out in Jan	218,200.00	204,200.00	207,700.00
Inventory in process, Jan 31	11,400.00	11,400.00	4,560.00	This is closing units multiplied by % of completion
Total units to be assigned costs:	229,600.00	215,600.00	212,260.00

Cost Information
Costs per equivalent unit	Materials	Conversion	Total
Total costs for Jan in cutting Department	1,714,020.00	1,167,430.00	2,881,450.00
Total equivalent units	215,600.00	212,260.00
Cost per equivalent unit	7.95	5.50	13.45
Costs assigned to production:
Inventory in process, Jan 1	109,200.00	58,800.00	168,000.00
Costs incurred in Jan	1,714,020.00	1,167,430.00	2,881,450.00
Total costs accounted for by the cutting Department			3,049,450.00
Costs allocated to completed and partially completed units
Inventory in process, Jan 1 balance	109,200.00	58,800.00	168,000.00
To complete inventory in process, Jan 1	-	19,250.00	19,250.00
Cost of completed Jan 1 work in process	109,200.00	78,050.00	187,250.00
Started and completed in Jan	1,623,390.00	1,123,100.00	2,746,490.00
Transferred to next Department in Jan			2,933,740.00
Inventory in process, Jan 31	90,630.00	25,080.00	115,710.00
Total costs assigned by the cutting Department			3,049,450.00

Answer b	Materials
Beginning Costs per equivalent unit	7.80
Costs per equivalent unit for Jan	7.95
Increase by	0.15
Answer b	Conversion
Beginning Costs per equivalent unit	5.60
Costs per equivalent unit for Jan	5.50
Decrease by	(0.10)