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, 2016: Work in Process-Sifting Department (800 units, 5 completed): Direct materials (800 x $2.15) S1 ,720 Conversion (800x x S0.40) 192 $1,912

Answer 1

Solution 1:

White Diamond Flour Company
Sifting Department
Computation of Equivalent unit (FIFO)
Particulars	Physical units	Material	Conversion
Units to be accounted for:
Beginning WIP Inventory	800
Units started this period	16700
Total unit to be accounted for	17500
Units Accounted for:
Units completed and transferred out
From beginning inventory Material - 0% Conversion - 2/5	800	0	320
Started and completed currently	15600	15600	15600
Units in ending WIP Material - 100% Conversion - 4/5	1100	1100	880
Total units accounted for	17500	16700	16800

White Diamond Flour Company
Sifting Department
Computation of Cost per Equivalent unit
Particulars	Total cost	Material	Conversion
Current period cost	$45,135.00	$37,575.00	$7,560.00
Equivalent units		16700	16800
Cost per equivalent unit		$2.25	$0.45

White Diamond Flour Company
Sifting Department
Producton cost report - FIFO
Particulars	Total cost	Material	Conversion
Cost Accounted for :
Cost assigned to unit transferred out:
Cost from beginning WIP Inventory	$1,912	$1,720	$192
Current cost added to complete beginning WIP:
Material	$0	$0
Conversion (320 * $0.45)	$144		$144
Total Cost from beginning inventory	$2,056	$1,720	$336
Current cost of unit started and completed:
Material (15600*$2.25)	$35,100	$35,100
Conversion (15600*$0.45)	$7,020		$7,020
Total cost of unit started and completed	$42,120	$35,100	$7,020
Total cost of unit transferred out	$44,176	$36,820	$7,356
Cost assigned to ending WIP:
Material (1100*$2.25)	$2,475	$2,475
Conversion (880*$0.45)	$396		$396
Total ending WIP inventory	$2,871	$2,475	$396
Total cost accounted for	$47,047	$39,295	$7,752

Solution 2:

Journal Entries - White Diamond Flour Company
Date	Particulars	Debit	Credit
July	Work In Process - Sifting Department Dr	$37,575.00
	To Work In Process - Milling Department		$37,575.00
	(Being cost transferred from milling to sifting department)
July	Work In Process - Packaging Department Dr	$44,176.00
	To Work In Process - Sifting Department		$44,176.00
	(Being cost transferred from sifting to packaging department)

Solution 3:

Cost per equivalent unit:
From current period	$2.25	$0.45
From beginning period	$2.15	$0.40
Increase (decrease)	$0.10	$0.05

Solution 4:

The cost of production report may be used as the basis for allocating product costs between Units completed & Transferred and Units in ending WIP. 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.