Question

Equivalent Units and Related Costs; Cost of Production Report; Entries Dover Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling departments, emerging as finished chemicals. The balance in the account Work in Process-Filling was as follows on January 1: Work in Process-Filing Department (3,800 units, 60% completed): Direct materials (3,800 x $10.60) Conversion (3,800 x 60% x $6.90) $40,280 15,732 $56,012 The following costs were charged to Work in Process-Filling during January: Direct materials transferred from Reaction Department: 49,000 units at $10.40 a unit $509,600 Direct labor 176,260 Factory overhead 169,340 During January, 48,600 units of specialty chemicals were completed. Work in Process ---Filling Department on January 31 was 4,200 units, 40% completed Required: 1. Prepare a cost of production report for the Filling Department for January. If an amount is zero, enter "0". If required, round your cost per equivalent unit answers to two decimal places. Dover Chemical Company Cost of Production Report-Filling Department For the Month Ended January 31 Unit Information Units charged to production Inventory in process, January 1 Receved from Reaction Department Total accounted for by the Filing Department Units to be red costs

Answer 1

Dover Chemical Company Cost of Production Report - Filling Department For the Month Ended January 31 Unit Information Units charged to production: Inventory in process, January 1 Received from Reaction Department Total Units accounted for by the Filling Department Units to be assigned costs: 3,800 49,000 52,800 Inventory in Process January 1 (3,800 x 40%) Units started and completed in January (48,600 - 3,800) Total units transferred to Finished goods in January Inventory in Process January 31(4,200 x 100%; 4,200 x 40% ) Total Equivalent units Cost Information Cost per equivalent units: Whole Units 3,800 44,800 48,600 4,200 52,800 Equivalent Units Direct Materials Conversion Cost 1,520 44,800 44,800 44,800 46,320 4,200 1,680 49,000 48,000 Total cost for January in Filling Department (a) Total Equivalent units (b) Cost per equivalent units (a/b) Direct Materials Conversion Cost 509,600 345,600 49,000 48,000 10.40 $ 7.20

Cost assigned to production: Direct Materials Conversion Cost Total 56,012 855,200 911,212 10,944 Inventory in process, January 1 Cost incurred in January (509,600 + 345,600) Total Cost accounted for by the Filling Department Costs allocated to complete 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 Cost assigned by Filling Deparment (Conversion cost = Direct labor + Factory Overhead) Working Notes: 465,920 322,560 56,012 10,944 66,956 788,480 855,436 55,776 911,212 43,680 12,096 FUP Cost Per EUP [B] Total Cost [ AB] [Α] 7.20 10,944 Cost to complete inventory in process, January 1 Material Conversion Cost Started and completed in January Material Conversion Cost Inventory in Process, January 31 Material Conversion Cost 44,800 44,800 $ $ 10.40 7.20 465,920 322,560 4,200 $ 1,680 $ 10.40 7.20 43,680 12,096

Account Titles and Explanation Debit Credit 509,600 Work in Process - Filling Department Work in Process - Reaction Department (to record transferred of goods from reaction to filling) 509,600 855,436 Finished Goods Work in process - Filling Department (to record transferred of finished goods) 855,436 (3) Direct Material Conversion Cost Cost as on Jan 1 (A) 10.60 6.90 10.60 Cost as on Jan 31 Increase/(Decrease) (B) (B-A) 10.40 (0.20) 7.20 0.30 10.40| Change in direct materials cost per equivalent unit Change in Conversion cost per equivalent unit Increase/Decrease Decrease Increase Amount $ $ 0.20 0.30 The cost of production report may be used as the basis for allocating production costs between Work in progress and Finished goods. The report can also be used to control costs by holding each department head responsible for the units entering production and the costs incurred in the department. Any differences in unit product costs from one month to another, such as those in part (3), can be studied carefully and any significant differences investigated.