Question

quivalent Units and Related Costs; Cost of Production Report; Enbries over Chemical Company manfactures spedialty chemicals by a series of three processes, all materials being introduced in the Distiling Department. From the Distiling Department, the materials pass through the Reaction and FIling departments merging as finished chemicals the balance in the account Work in Process-Fling was as follows on January 1 Work in Process-Fling Department 3,000 units, 40% completed): Direct materials (3,000 x $14.90) $44,700 Conversion (3,000 x 40% x $9.70) 11,640 $56,340 the following costs were charged to Work in Process-Filling during January: Direct materials transferred from Reaction Department: 38,700 units at $14.70 a unit $568,090 Direct labor 196,150 Factory everhead 188,465 During lanuary, 38,400 units of specialty chemicals were completed. Work in Process-Filing Department on January 31 was 3,300 units, 50% completed. tequired: Prepare a cost of production report for the Filing Department for January. If an amount is zera, enter "0", If required, round your cest per equivalent unt answers to two decimal places. Dover Chemical Company Cost of Production Report-Filling Department For the Honth Ended January 31 nfmaton Unts charped to production Inventory in process, January 1 Receved from Reation Department Total unts accounted for by the Filling Department Units to be assigned conts Equivalent Units Whole Direct

Answer 1

Solution 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			3000
Received from Reaction Department			38700
Total units accounted for by the Filling Department			41700
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, January 1	3000	0	1800
Started and completed in January	35400	35400	35400
Transferred to finished goods in January	38400	35400	37200
Inventory in process, January 31	3300	3300	1650
Total units to be assigned costs	41700	38700	38850
Cost Information
Cost per equivalent unit:
		Direct Materials	Conversion
Total costs for January in Filling Department		$568,890.00	$384,615.00
Total equivalent units		38700	38850
Cost per equivalent unit		$14.70	$9.90
Costs assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, January 1	$44,700.00	$11,640.00	$56,340.00
Costs incurred in January	$568,890.00	$384,615.00	$953,505.00
Total costs accounted for by the Filling Department	$613,590.00	$396,255.00	$1,009,845.00
Costs allocated to completed and partially completed units:
Inventory in process, January 1 balance	$44,700.00	$11,640.00	$56,340.00
To complete inventory in process, January 1	$0.00	$17,820.00	$17,820.00
Cost of completed January 1 work in process	$44,700.00	$29,460.00	$74,160.00
Started and completed in January	$520,380.00	$350,460.00	$870,840.00
Transferred to finished goods in January	$565,080.00	$379,920.00	$945,000.00
Inventory in process, January 31	$48,510.00	$16,335.00	$64,845.00
Total costs assigned by the Filling Department	$613,590.00	$396,255.00	$1,009,845.00

Solution 2:

Journal Entries - Dover Chemical Company
S. No.	Particulars	Debit	Credit
1	Work In Process - Filling Department Dr	$568,890.00
	To Work In Process - Reaction Department		$568,890.00
	(Being cost of goods completed in reaction transferred to Filling department)
2	Finished Goods Inventory Dr	$945,000.00
	To Work In Process - Filling Department		$945,000.00
	(Being completed units transferred to finished goods)

Solution 3:

Particulars	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit ($14.70 - $14.90)	Decrease	$0.20
Change in conversion cost per equivalent unit ($9.90 - $9.70)	Increase	$0.20

Solution 4:

The cost of production report may be used as the basis for allocating product costs between work in process and Transferred out goods. The report can also be used to control costs by holding each department head responsible for the units entering production and 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.