Question

1. 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, 12,000 units, 80% completed		$148,800*
   *Direct materials (12,000 × $9.6)	$115,200
   Conversion (12,000 × 80% × $3.5)	33,600
   	$148,800
   Materials added during January from Weaving Department, 184,800 units		$1,783,320
   Direct labor for January		274,421
   Factory overhead for January		335,403
   Goods finished during January (includes goods in process, January 1), 187,000 units		—
   Work in process, January 31, 9,800 units, 20% completed		—

   a. Prepare a cost of production report for the Cutting Department. If an amount is zero or a blank, enter in "0". For the The rate used to allocate costs between completed and partially completed production.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 to production:
   Inventory in process, January 1
   Received from Weaving Department
   Total units accounted for by the Cutting Department
   Units to be assigned costs:
   		Equivalent Units
   	Whole Units	Direct Materials	Conversion
   Inventory in process, January 1
   Started and completed in January
   Transferred to finished goods in January
   Inventory in process, January 31
   Total units to be assigned costs
   Cost Information
   Costs per equivalent unit:
   		Direct Materials	Conversion
   Total costs for January in Cutting Department		$	$
   Total equivalent units
   Cost per equivalent unit		$	$
   Costs assigned to production:
   	Direct Materials	Conversion	Total
   Inventory in process, January 1			$
   Costs incurred in January
   Total costs accounted for by the Cutting Department			$
   Cost allocated to completed and partially completed units:
   Inventory in process, January 1 balance			$
   To complete inventory in process, January 1		$
   Cost of completed January 1 work in process			$
   Started and completed in January	$
   Transferred to finished goods in January			$
   Inventory in process, January 31
   Total costs assigned by the Cutting Department			$

   Feedback

   b. Compute and evaluate the change in the costs per equivalent unit for direct materials and conversion from the previous month (December). If required, round your answers to two decimal places.

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

Answer 1

Solution a:

Karachi Carpet Company
Cost of Production Report-Cutting Department
For the Month Ended January 31
Unit Information
Units charged to production:
Inventory in process, January 1			12000
Received from Weaving Department			184800
Total units accounted for by the Cutting Department			196800
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, January 1	12000	0	2400
Started and completed in January	175000	175000	175000
Transferred to finished goods in January	187000	175000	177400
Inventory in process, January 31	9800	9800	1960
Total units to be assigned cost	196800	184800	179360
Cost Information
Cost per equivalent unit:
		Direct Materials	Conversion
Total costs for January in Cutting Department		1783320	609824
Total equivalent units		184800	179360
Cost per equivalent unit		9.65	3.40
Costs assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, January 1			148800
Costs incurred in January			2393144
Total costs accounted for by the Cutting Department			2541944
Costs allocated to completed and partially completed units:
Inventory in process, January 1 balance			148800
To complete inventory in process, January 1	0	8160	8160
Cost of completed January 1 work in process			156960
Started and completed in January	1688750	595000	2283750
Transferred to finished goods in January			2440710
Inventory in process, January 31	94570	6664	101234
Total costs assigned by the Cutting Department			2541944

Solution b:

	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Increase	0.05
Change in conversion cost per equivalent unit	Decrease	0.10