Question

Hearty Soup Co. uses a process cost system to record the costs of processing soup, which requires the cooking and filling processes. Materials are entered from the cooking process at the beginning of the filling process. The inventory of Work in Process-Filling on April 1 and debits to the account during April were as follows: Bal., 800 units, 30% completed: Direct materials (800 × $4.30) $3,440 Conversion (800 × 30% × $1.75) 420 $3,860 From Cooking Department, 7,400 units $32,560 Direct labor 8,528 Factory overhead 4,112 During April, 800 units in process on April 1 were completed, and of the 7,400 units entering the department, all were completed except 600 units that were 90% completed. Charges to Work in Process-Filling for May were as follows: From Cooking Department, 9,600 units $44,160 Direct labor 12,008 Factory overhead 5,088 During May, the units in process at the beginning of the month were completed, and of the 9,600 units entering the department, all were completed except 250 units that were 35% completed. Required: 1. (a) Enter the balance as of April 1, in a four-column account for Work in Process-Filling. Record the debits and the credits in the account for April. (b) Construct a cost of production report, and present computations for determining i. equivalent units of production for materials and conversion. ii. costs per equivalent unit.* iii. cost of goods finished, differentiating between units started in the prior period and units started and finished in April.* iv. work in process inventory.* * If an amount is zero, enter "0". Round your cost per unit answers to the nearest cent and final answers to the nearest dollar amount. 2. (a) Provide the same information for May by recording the May transactions in the four-column work in process account. (b) Construct a cost of production report, and present the May computations (i through iv) listed in part 1(b). 3. Comment on the change in costs per equivalent unit for March through May for direct materials and conversion costs.

Answer 1

FOLLOWING CALCULATION FOR APRIL
WORK IN PROCESS A/C FOR APRIL
	UNITS	AMOUNT		UNITS	AMOUNT
TO OPENING WIP	800	$                 7,300	TO FINISHED STOCK A/C	7600	$                       48,996
TO MATERIAL COST	7400	$              32,560	TO CLOSING WIP	600	$                         3,504
TO LABOUR COST		$                 8,528			.
TO FACTORY OVERHEAD		$                 4,112
	8200	$              52,500		8200	$                       52,500
DETAILED CALCULATION AS FOLLOW
STATEMENT OF EQUIVALENT PRODUCTION(FIFO METHOD)
	UNITS	MATERIAL		LABOR AND OVERHEAD
		%COMPLETION	EQUIVALENT UNITS	%COMPLETION	EQUIVALENT UNITS
OPENING WIP	800	0	0	70.00	560
FINISHED AND TRANSFERRED	6800	100	6800	100	6800
CLOSING WORK IN PROGRESS	600	100	600	90	540
			7400		7900
STATEMENT OF COST FOR CALCULATION OF COST PER EQUIVALENT UNIT
COST	MATERIAL	LABOR	OVERHEAD	TOTAL
COST INCURRED DURING THE PROCESS	$          32,560	$                 8,528	$                                       4,112	$              45,200
EQUIVALENT UNITS	7400	7900	7900
COST PER UNIT=TOTA COST/UNITS	$               4.40	$                   1.08	$                                          0.52	$                   6.00
VALUATION OF FINISHED GOODS
	UNITS	RATE PER UNIT
OPENING WIP	800			$           7,300.00
ADDITION COST ON OPENING WIP
MATERIAL	0	$                   4.40		$                        -
LABOR	560	$                   1.08		$              604.52
OVERHEAD	560	$                   0.52		$              291.48
VALUE OF UNITS FINISHED FROM OPENING WIP	800			$                 8,196
VALUE OF UNITS COMPLETED DURING THE PROCESS	6800	$                   6.00		$              40,800
VALUE OF TOTAL 7600 UNITS TRANSFERRED OUT				$         48,996
VALUATION OF CLOSING WIP
MATERIAL	600	$                   4.40	$                                       2,640
LABOR	540	$                   1.08	$                                     582.93
OVERHEAD	540	$                   0.52	$                                     281.07	$                 3,504
ALL BELOW CALCULATION ARE FOR MAY
WORK IN PROCESS A/C FOR MAY
	UNITS	AMOUNT		UNITS	AMOUNT
TO OPENING WIP	600	$                 3,504	TO FINISHED STOCK A/C	9950	$                       63,452
TO MATERIAL COST	9600	$              44,160	TO CLOSING WIP	250	$                         1,308
TO LABOUR COST		$              12,008			.
TO FACTORY OVERHEAD		$                 5,088
	10200	$              64,760		10200	$                       64,760
COST OF PRODUCTION REPORT
STATEMENT OF EQUIVALENT PRODUCTION(FIFO METHOD)
	UNITS	MATERIAL		LABOR AND OVERHEAD
		%COMPLETION	EQUIVALENT UNITS	%COMPLETION	EQUIVALENT UNITS
OPENING WIP	600	0	0	10.00	60
FINISHED AND TRANSFERRED	9350	100	9350	100	9350
CLOSING WORK IN PROGRESS	250	100	250	35	87.5
			9600		9497.5
STATEMENT OF COST FOR CALCULATION OF COST PER EQUIVALENT UNIT
COST	MATERIAL	LABOR	OVERHEAD	TOTAL
COST INCURRED DURING THE PROCESS	$          44,160	$              12,008	$                                       5,088	$              61,256
EQUIVALENT UNITS	9600	9497.5	9497.5
COST PER UNIT=TOTA COST/UNITS	$               4.60	$                   1.26	$                                          0.54	$                   6.40
VALUATION OF FINISHED GOODS
	UNITS	RATE PER UNIT
OPENING WIP	600			$           3,504.00
ADDITION COST ON OPENING WIP
MATERIAL	0	$                   4.60		$                        -
LABOR	60	$                   1.26		$                 75.86
OVERHEAD	60	$                   0.54		$                 32.14
VALUE OF UNITS FINISHED FROM OPENING WIP	600			$                 3,612
VALUE OF UNITS COMPLETED DURING THE PROCESS	9350	$                   6.40		$              59,840
VALUE OF TOTAL 9950 UNITS TRANSFERRED OUT				$         63,452
VALUATION OF CLOSING WIP
MATERIAL	250	$                   4.60	$                                       1,150
LABOR	87.5	$                   1.26	$                                     110.63
OVERHEAD	87.5	$                   0.54	$                                       46.88	$                 1,308