Question

1. Cost of Production Report

   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., 30,000 units, 10% completed					121,800
   	31	Direct materials, 155,000 units	620,000				741,800
   	31	Direct labor	90,000				831,800
   	31	Factory overhead	33,272				865,072
   	31	Goods transferred, 149,000 units			?
   	31	Bal., ? units, 45% 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 the nearest cent.

   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 Packing 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 $119,400 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 two decimal places.

   	Increase or Decrease	Amount
   Change in direct materials cost per equivalent unit		$
   Change in conversion cost per equivalent unit		$

Answer 1

a.)	Unit Information
	Units Charged to Production
	Inventory in process, July 1			30,000
	Received from materials storeroom			155,000
	Total units accounted for by the Roasting Department			185,000
	Units to be assigned costs:		Equivalent	Units
		Whole	Direct
		Unit	Materials	Conversion
	Inventory in process, July 1 ( Material 0% , Conversion 90% )	30,000	-	27,000
	Started & Completed in July (149,000 - 30,000)	119,000	119,000	119,000
	Transferred to finished goods in July	149,000	119,000	146,000
	Inventory in process, July 31 ( Material 100%, Conversion 45% )	36,000	36,000	16,200
	Total units to assigned cost $	185,000	155,000	162,200
	Cost Information
	Cost per equivalent unit
			Direct
			Materials	Conversion
	Total costs for July in Roasting Department		620,000	123,272
	/Total Equivalent units		155,000	162,200
	Cost per equivalent unit $		4.00	0.76
	Costs assigned to production:
		Direct
		Materials	Conversion	Total $
	Inventory in process, July 1			121,800
	Costs incurred in July			743,272
	Total costs accounted for by the Roasting Department $			865,072
	Costs allocated to completed & partially completed units
	Inventory in process, July 1, Balance			121,800
	To Complete Inventory in process, July 1	0	20,520	20,520
	Costs of completed July 1 work in process			142,320
	Started & Completed in August	4,76,000	90,440	566,440
	Transferred to finished goods in August			708,760
	Inventory in process, August 31	1,44,000	12,312	156,312
	Total costs assigned by the Roasting Department $			865,072

(b)		Increase or Decrease	Amount $
	Change in direct materials cost per equivalent unit	Increase	0.02	=4-3.98
	Change in Conversion cost per equivalent unit	Decrease	0.04	=0.8-0.76

	Working:
	Cost per equivalent unit of Direct materials of June	3.98	=119400/30000
	Cost per equivalent unit of Conversion of June	0.80	=(121800-119400)/(30000*0.1)