Question

please answer 1 and 2

PR 18-2A Cost of production report Venus Chocolate Company processes chocolate into candy bars. The process begins by placing direct materials (raw chocolate, milk, and sugar) into the Blending Department. All materials are placed into production at the beginning of the blending process. After blending, the milk chocolate is then transferred to the Molding Department, where the milk chocolate is formed into candy bars. The following is a partial work in process account of the Blending Department at January 31, 2010: ACCOUNT Work in Process—Blending Department ACCOUNT NO. Balance Debit Credit Date Item Debit Credit Jan. 1 Bal., 6,000 units, %s completed 31 Direct materials, 240,000 units Direct labor 31 Factory overhead Goods transferred, 242,000 units 31 Bal., 2 units, 's completed 31/ 21,840 789,840 943,040 981,200 768,000 153,200 38,160 Instructions 1. Prepare a cost of production report, and identify the missing amounts for Work in Process--Blending Department. 2. Assuming that the January 1 work in process inventory includes direct materials of $18,600, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between December and January.

Answer 1

Solution Beginning Work in process units (3/5 completed) 6,000 Units started in production during January month 240,000 Units completed and transferred out 242,000 236,000 Units started and completed during January month (242,000 6,000) Ending Work in process units (6,000+ 240,000 242,000) 4,000 Required 1.: Cost of production report Venus Chocolate Company Cost of Production Report (FIFO Method) January month Physical Equivalent Units Units Materials Conversion Units Units to account for Beginning work-in process Started in production during January month 6,000 240,000 246,000 Total units to account for Units accounted for Units completed and transferred out From Beginning Inventory 2,400 236,000 6,000 0 236,000 4,000 246,000 236,000 4,000 Started and completed currently Ending work-in process 800 Total units accounted for 239,200 240,000 Total Costs Materials Conversion Costs to account for Costs in beginning work-in process Current period costs Direct materials $21,840 $959,360 $768,000 $191,360 $191,360 Conversion ($153,200+ $38,160) Total costs to be accounted for $981,200 $768,000 Costs per equivalent unit: Materials $3.20 Conversion $0.80 Costs accounted for: Costs assigned to units transferred out: Costs from beginning WIP inventory $21,840 Current costs added to complete beginning WIP Inventory: $0 $1,920 $23,760 $0 Materials $1,920 Conversion Total costs from beginning inventory Current costs of units started and completed: $755,200 $755,200 $188,800 Materials $188,800 Conversion Total costs of units started and completed $944,000 Total costs of units transferred out $967,760 Costs assigned to ending WIP inventory: Materials $12,800 $12,800 $640 $640 Conversion $13,440 $981,200 Total ending WIP inventory Total costs accounted for $768,000 $191,360

Required 1 Cost of Goods transferred, 242,000 units Bal. 4,000 units, 1/5 completed 967,760 13,440 Required 2 Beginning work in process units 6,000 units Beginning WIP equivalent units for Material (6,000 x 100%) 6,000 units Beginning WIP equivalent units for Conversion (6,000 x 3/5) 3,600 units Total cost of beginning Work in Process units $21,840 Less: Direct materials cost in beginning WIP units $18,600 Conversion cost in beginning WIP units 240 Cost per equivalent unit for December month Material ($18,600/6,000 equ. units) $3.10 Conversion ($3,240/ 3,600 equ. units) $0.90 Increase (Decrease) December January Cost per Equivalent unit Month Month in January month Materials $3.10 $3.20 $0.10 ($0.10) $0.90 $0.80 Conversion

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C E 1 Solution Beginning Work in process units (3/5 completed) 6000 Units started in production during January month 240000 |Units completed and transferred out 242000 -E5-E3 Units started and completed during January month Ending Work in process units (6,000+240,000-242 -E3+E4-E5 Required 1.: Cost of production report 11 Venus Chocolate Company Cost of Production Report FIFO Method) January month Physical Equivalent Units Units Conversion Materials Units Units to account for: Beginning work-in process -E3 -E4 -с18+C19 Started in production during January month Total units to account for Units accounted for Units completed and transferred out C24 (1-3/5) -C25 100 % C26 1/5 =SUM(D23:D26)SUM(E23:E26) From Beginning Inventory Started and completed currently Ending work-in process Total units accounted for -E3 -E6 -E7 -SUM(C23:C26 0 25 C25 100% C26 100 % 26 27 28 29 Conversion Total Costs Materials 30 Costs to account for Costs in beginning work-in process 21840 D33+E34 31 32 Current period costs 768000 33 Direct materials Conversion (S153,200+$38,160) Total costs to be accounted for 34 -153200+38160 -SUMID31:D34) =SUM(E31:E34) -SUM(C31:C34) 35 36

A C E F 37 Costs per equivalent unit: 38 D33/D27 Materials 39 -E34/E27 Conversion 40 41 Costs accounted for: Costs assigned to units transferred out Costs from beginning WIP inventory 42 43 -C31 Current costs added to complete beginning WIP 44 Inventory: -SUM(D45:E45) -SUM(D46:E46) -SUM(C43:C46 ) =D24 D38 45 Materials 46 -E24 E39 Conversion 47 Total costs from beginning inventory 48 Current costs of units started and completed: -SUM(D49:E49) -SUM(D50:E50 -SUM(C49:C50) C47+C51 49 -D25 D38 Materials - E25 E39 50 Conversion 51 Total costs of units started and completed 52 Total costs of units transferred out Costs assigned to ending WIP inventory: 53 54 =SUMD54: E54 ) -SUM(D55:E55) -SUM(C54:C55 -C52+C56 -D26 D38 Materials 55 - E26 E39 Conversion 56 Total ending WIP inventory Total costs accounted for -SUMD43:D56) =SUM(E43:E56) 57 58

A C E F 59 Required1 60 Cost of Goods transferred, 242,000 units Bal. 4,000 units, 1/5 completed 61 C52 62 -C56 63 Required 2 64 65 66 6000 Beginning work in process units units 67 =D66 100 % D66 3/5 Beginning WIP equivalent units for Material (6,000 Beginning WIP equivalent units for Conversion (6,00 units 68 units 69 70 -С31 Total cost of beginning Work in Process units 71 18600 Less: Direct materials cost in beginning WIP units 72 =D70-D71 Conversion cost in beginning WIP units 73 Cost per equivalent unit for December month Material ($18,600/6,000 equ. units) Conversion ($3,240/3,600 equ. units) 74 75 D71/D67 D72/D68 76 77 Increase December January Month Cost per Equivalent unit (Decrease) in January month Month 78 -D75 =D76 D79-C79 79 Materials Conversion =D38 -E39 80 -D80-C80 81