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 begi work in process, January 1, 10,400 units, 60% completed 115,024 "Direct materials (10,400 x $8) conversion (10,400 x 60% $5.1) $83,200 31,824 $115,024 Materials added during January from Weaving Department, 160,000 units Direct labor for January Factory overhead for January Goods finished during January (includes goods in process, January 1), 361,800 units work in process, January 31, 8,600 units, 35% 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. $1,304,000 356,783 436,067 Karachi Carpet Company Cost of Production Report-Cutting Department For the Month Ended January 31 Units charged to production: Inventory in process, January 1 10.400 160,000 Previous Nxt)

Answer 1

Solution a:

Karachi Carpet
Cutting Department
Computation of Equivalent unit (FIFO)
Particulars	Physical units	Material	Conversion
Units to be accounted for:
Beginning WIP Inventory	10400
Units started this period	160000
Total unit to be accounted for	170400
Units Accounted for:
Units completed and transferred out
From beginning inventory Material - 0% Conversion - 40%	10400	0	4160
Started and completed currently	151400	151400	151400
Units in ending WIP Material - 100% Conversion - 35%	8600	8600	3010
Total units accounted for	170400	160000	158570

Karachi Carpet
Cutting Department
Computation of Cost per Equivalent unit
Particulars	Total cost	Material	Conversion
Current period cost	$2,096,850.00	$1,304,000.00	$792,850.00
Equivalent units		160000	158570
Cost per equivalent unit		$8.15	$5.00

Karachi Carpet
Cutting Department
Producton cost report - FIFO
Particulars	Total cost	Material	Conversion
Cost Accounted for :
Cost assigned to unit transferred out:
Cost from beginning WIP Inventory	$115,024	$83,200	$31,824
Current cost added to complete beginning WIP:
Material	$0	$0
Conversion (4160 * $5)	$20,800		$20,800
Total Cost from beginning inventory	$135,824	$83,200	$52,624
Current cost of unit started and completed:
Material (151400*$8.15)	$1,233,910	$1,233,910
Conversion (151400*$5)	$757,000		$757,000
Total cost of unit started and completed	$1,990,910	$1,233,910	$757,000
Total cost of unit transferred out	$2,126,734	$1,317,110	$809,624
Cost assigned to ending WIP:
Material (8600*$8.15)	$70,090	$70,090
Conversion (3010*$5)	$15,050		$15,050
Total ending WIP inventory	85,140	70,090	15,050
Total cost accounted for	$2,211,874	$1,387,200	$824,674

Solution b:

Change in direct material cost per unit from December to January = $8.15 - $8 = $0.15 increase

Change in conversion cost per equivalent unit from December to January = $5 - $5.10 = $0.10 Decrease