Question

Cost of Production Report  

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, 1,400 units, 75% completed				$ 22,960*
	*Direct materials (1,400 X $12.65)	$17,710
	Conversion (1,400 X 75% X $5.00)	5,250
		$22,960
Materials added during January from Weaving Department, 58,000 units				$742,400
Direct labor for January				134,550
Factory overhead for January				151,611
Goods finished during January (includes goods in process, January 1), 56,200 units				—
Work in process, January 31, 3,200 units, 30% 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 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

a. How much more (percentage amount) needed to be done to the beginning work in process units to make the units to complete to transfer to the next department? Did these units require more material cost or more conversion cost? How much, in terms of cost, had been done to these units in the prior period?   In order for units to be transferred to the next department, the units have to be complete with respect to both materials and conversion. When are materials added in the process? How complete are the units in ending inventory with respect to materials? How complete are the units in ending inventory with respect to conversion? Materials and conversion cost needs to be allocated among the equivalent units. Are the number of equivalent units the same for materials and conversion?

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	Increase	$
Change in conversion cost per equivalent unit	Increase	$

Answer 1

Solution:

a) Prepare Cost of Production Report for the month ended January 31 as follows: K C Company Cost of Production Report For the month ended January 31 Unit Information Units charged to the production: Inventory in process, J Received from Weavin Total Units accounted for Units 1,400 58,000 59.400 artment artment Units to be assigned costs: Equivalent Units Direct Particulars Whole Units Materials Conversion Inventory in process Started and Completed in January 56,200 1,4 Transferred to finished Inventory in process, January 31 (59,400 56,2 Total units to be assigned costs , J 1,400 54,800 56,200 3,200 350 54,800 54,800 in 3,200 960 58,000

Cost Information Costs per Equivalent Unit: irt Conversion Particulars Materials Total Cost for J Total Equivalents Units Cost per Equivalent Unit in Cuttin 42,400286,161 56,110 5.10 artment 58,000 12.80 Costs assigned to the production: Direct Materials Particulars ConversionTotal 17,710 742,400 760,110 5,250 Inventory in process, J Costs incurred in Total Costs accounted for by the c 22,960 286161 1028,561 051,521 artment 291.411 Costs allocated to completed and partially completed units Inventory in process, J To c Cost of c Started and Transferred to finished Inventory in process, J Total Costs assigned by the C 17,710 22,960 1,785 24,745 279.480 980,920 1,005,665 45.856 1,051,521 5,250 1,785 7,035 y 1 balance n process, J 17,710 701,440 ted J 1 work in process ted in J in 31 40,960 4,896 artment

b) Compute and evaluate the changes in costs per equivalent unit for direct materials and conversion from the previous month (December) as follows: Increaseor Amount (S) Decrease Particulars Change in direct materials cost per equivalent unit (S12.80- $12.65) Change in conversion cost per equivalent unit (S5.10 $5.00) Increase 0.15 Increase 0.1