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
(700 units, 3/5 completed):
Direct materials (700 × $2.25)	$1,575
Conversion (700 × 3/5 × $0.30)	126
	$1,701

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

Direct materials transferred from Milling Department:
15,800 units at $2.35 a unit	$37,130
Direct labor	4,520
Factory overhead	1,017

During July, 15,200 units of flour were completed. Work in Process-Sifting Department on July 31 was 1,300 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 the exact wording of the account titles. CNOW journals do not use lines for spaces or journal explanations. Every line on a journal page is used for debit or credit entries. Do not add explanations or skip a line between journal entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. 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). 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. WHITE DIAMOND FLOUR COMPANY Cost of Production Report-Sifting Department For the Month Ended July 31 UNITS Whole Units Equivalent Units Direct Materials Conversion Units charged to production: Inventory in process, July 1 Received from Milling Department Total units accounted for by the Sifting Department Units to be assigned costs: Inventory in process, July 1 (3/5 completed) Started and completed in July Transferred to Packaging Department in July Inventory in process, July 31 (4/5 completed) Total units to be assigned costs COSTS Costs Direct Materials Conversion Total Cost per equivalent unit: Total costs for July in Sifting Department Total equivalent units ÷ ÷ Cost per equivalent unit Costs assigned to production: Inventory in process, July 1 Costs incurred in July Total costs accounted for by the Sifting Department Costs allocated to completed and partially completed units: Inventory in process, July 1-balance To complete inventory in process, July 1 Cost of completed July 1 work in process Started and completed in July Transferred to Packaging Department in July Inventory in process, July 31 Total costs assigned by the Sifting Department 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. Direct materials:    Conversion:    4. Discuss the uses of the cost of production report and the results of part (3). The cost of production report may be used as the basis for allocating product costs between 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 the exact wording of the account titles. CNOW journals do not use lines for spaces or journal explanations. Every line on a journal page is used for debit or credit entries. Do not add explanations or skip a line between journal entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Use the date July 31 for all journal entries. PAGE 10 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 2 3 4

Answer 1

1)
WHITE DIAMOND FLOUR COMPANY
Cost of Production Report-Sifting Department
For the Month Ended July 31, 2019		Equivalent Units
UNITS	Whole Units	Direct Materials	Conversion
Units charged to production:
Inventory in process, July 1	700
Received from Milling Department	15800
Total units accounted for by the Sifting Department	16500
Units to be assigned costs:
Inventory in process, July 1 ( 3/5  completed)	700	0	280
Started and completed in July ($15800 - 1300)	14500	14500	14500
Transferred to Packaging Department in July	15200	14500	14780
Inventory in process, July 31 (  4/5 completed)	1300	1300	1040
Total units to be assigned costs	16500	15800	15820
COSTS
Direct Materials	Direct Materials	Conversion	Total
Costs per equivalent unit:
Total costs for July in Sifting Department (4520+ 1017)	37130	5537
Total equivalent units	÷15,800	÷ 15,820
Cost per equivalent unit	2.35	0.35
Costs assigned to production:
Inventory in process, July 1			1701
Costs incurred in July			42667
Total costs accounted for by the Sifting Department			44368
Cost allocated to completed and
partially completed units:
Inventory in process, July 1 balance			1701
To complete inventory in process, July 1 (280 x $0.35)		98	98
Cost of completed July 1 work in process			1799
Started and completed in July 14,500 units x cot per equivalent unit	34075	5075	39150
Transferred to Packaging Department in July			40949
Inventory in process, July 31	3055	364	3419
Total costs assigned by the Sifting Department			44368
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.
	DEBIT	CREDIT
Work in Process—Sifting Department	37130
Work in Process—Milling Department		37130
Work in Process—Packaging Department	40949
Work in Process—Sifting Department		40949
3. Determine the increase or decrease in the cost per equivalent unit from June to July for direct materials and conversion costs.
Direct materials: $0.10 increase ($2.35 – 2.25)
Conversion: $0.05 increase ($0.35 – 0.30)
4. The cost of production report may be used as the basis for allocating product costs between     and    . 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.