Equivalent Units and Related Costs; Cost of Production Report; Entries Dover Che
ID: 2339764 • Letter: E
Question
Equivalent Units and Related Costs; Cost of Production Report; Entries
Dover Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling departments, emerging as finished chemicals.
The balance in the account Work in Process—Filling was as follows on January 1:
The following costs were charged to Work in Process—Filling during January:
During January, 70,400 units of specialty chemicals were completed. Work in Process—Filling Department on January 31 was 6,100 units, 30% completed.
Required:
1. Prepare a cost of production report for the Filling Department for January. If an amount is zero, enter "0". If required, round your cost per equivalent unit answers to two decimal places.
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2. Journalize the entries for (1) costs transferred from Reaction to Filling and (2) the cost transferred from Filling to Finished Goods.
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3. Determine the increase or decrease in the cost per equivalent unit from December to January for direct materials and conversion costs. If required, round your answers to two decimal places.
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 Work in Process and Finished Goods . 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.
Work in Process—Filling Department (5,500 units, 30% completed): Direct materials (5,500 x $12.3) $67,650 Conversion (5,500 x 30% x $8) 13,200 $80,850Explanation / Answer
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 5500 Received from Reaction Department 71000 Total units accounted for by the Filling Department 76500 Units to be assigned costs: Equivalent Units Whole Units Direct Materials Conversion Inventory in process, January 1 5500 0 3850 Started and completed in January 64900 64900 64900 Transferred to Packing Department in January 70400 64900 68750 Inventory in process, January 31 6100 6100 1830 Total units to be assigned costs 76500 71000 70580 Cost Information Costs per equivalent unit: Direct Materials Conversion Total costs for January in Filling Department 859100 578756 Total equivalent units 71000 70580 Cost per equivalent unit 12.1 8.2 Costs charged to production: Direct Materials Conversion Total Inventory in process, January 1 80850 Costs incurred in January 1437856 Total costs accounted for by the Filling Department 1518706 Cost allocated to completed and partially completed units: Inventory in process, January 1 balance 80850 To complete inventory in process, January 1 0 31570 31570 Cost of completed January 1 work in process 112420 Started and completed in January 785290 532180 1317470 Transferred to finished goods in January 1429890 Inventory in process, January 31 73810 15006 88816 Total costs assigned by the Filling Department 1518706 2 Work in Process-Filling Department 859100 Work in Process-Reaction Department 859100 Finished Goods 1429890 Work in Process-Filling Department 1429890 3 Increase or Decrease Amount Change in direct materials cost per equivalent unit Decrease 0.2 Change in conversion cost per equivalent unit Increase 0.2 4 The cost of production report may be used as the basis for allocating product costs between Work in Process and Finished Goods .
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