Question

White Diamond Flour Company manufactures flour by a series of three processes, beginning with wheat grain being introduced in the Milling Department. From the Milling Department, the materials pass through the Sifting and Packaging departments, emerging as packaged refined flour.

The balance in the account Work in Process-Sifting Department was as follows on July 1:

Work in Process-Sifting Department
(1,000 units, 3/5 completed):
Direct materials (1,000 × $2.15)	$2,150
Conversion (1,000 × 3/5 × $0.40)	240
	$2,390

The following costs were charged to Work in Process-Sifting Department during July:

Direct materials transferred from Milling Department:
16,700 units at $2.25 a unit	$37,575
Direct labor	4,540
Factory overhead	3,056

During July, 16,600 units of flour were completed. Work in Process-Sifting Department on July 31 was 1,100 units, 4/5 completed.

	Required:
1.	Prepare a cost of production report for the Sifting Department for July. If an amount is zero, enter "0". Round your cost per unit answers to the nearest cent and final answers to the nearest dollar amount.
2.	Journalize the entries for costs transferred from Milling to Sifting and the costs transferred from Sifting to Packaging. Refer to the Chart of Accounts for correct wording of account titles. Use the date July 31 for all journal entries.
3.	Determine the increase or decrease in the cost per equivalent unit from June to July for direct materials and conversion costs. Round your answers to the nearest cent.
4.	Discuss the uses of the cost of production report and the results of part (3).

Answer 1

1.statement of showing calculation of no. of unit completed and transferred out? 2 prepare journal entries as follow date account title and explanation 1 work in process-shifting debit credit units introduced during the period add: beginning WIP 16700 37575 work in process-miling (to record transfer of completed units to 1000 37575 next department Total units available for production less: no of units ending WIP No.of units completed and transferred out 17700 1100 16600 2 work in process-packaging 44793 work in process-shifting (to record transfer of completed units to next department) 44793 1(a) statement of showing calculation of equivalent unit of production Materials Conversion 16600 1100 60% 660 3 difference in cost per equivalent unit: unit completed and transferred out add: unit ending WIP %age completion equivalent unit in ending WIP material 2.24-2.15 0.09 increased conversion-0.45-0.40-0.05increased 16600 1100 100% 1100 4 uses of costs of production report: a.it show the amount of costs alloacated to ending WIP and finished good inventory b.it show the calculation of cost per equivalent unit in production c.it helps in understanding the amount of total cost assigned and amount of cost to be accounted for Total equivalent unit in production 17700 17260 1(b) production cost report Materials Conversion Total cost of beginning WIP costs added during the period total cost to be accounted for: equivalent unit cost per equivalent unit ending WIP %age completion equivalent unit in ending WIP cost in ending WIP (NO. OF EQUIVALENT UNIT IN ENDING WIP*COST PER EQUIVALENT UNIT) unit completed and transferred out cost of units completed and transferred out( UNITS COMPLETED AND TRANSFERRED OUT COST PER EQUIVALENT UNIT) total cost accounted for: 2150 37575 39725 17700 2.24 1100 100% 1100 240 7596 4517 7836 47561 2390 17260 0.45 1100 60% 660 2469 16600 300 2768 16600 37256 7536 44793 47561 IMPORTANT NOTE: %age completion of ending inventory is assumed to be 60%