HomeStyle Soup Co. uses a process cost system to record the costs of processing

Question

HomeStyle Soup Co. uses a process cost system to record the costs of processing soup, which requires the cooking and filling processes. Materials are entered from the cooking process at the beginning of the filling process. The inventory of Work in Processfilling on February 1 and debits to the account during February 2012 were as follows: During February, 400 units in process on February 1 were completed, and of the 8,900 units entering the department, all were completed except 650 units that were 90% completed. Charges to Work in ProcessFilling for March were as follows: During March, the units in process at the beginning of the month were completed, and of the 9,600 units entering the department, all were completed except 500 units that were 35% completed. Instructions: 1.Enter the balance as of February 1, 2012, in a four-column account for Work in Process Filling. Record the debits and the credits in the account for February. Construct a cost of production report, and present computations for determining (a) equivalent units of production for materials and conversion, (b) costs per equivalent unit, (c) cost of goods finished, differentiating between units started in the prior period and units started and finished in February, and (d) work in process inventory. If an amount box does not require an entry, leave it blank or enter "0". ACCOUNT Work in Process-Filling DepartmentACCOUNT NO. BALANCE DATE ITEM POST. REF. DEBIT CREDIT DEBIT CREDIT Feb. 1 Bal., 400 units, 30% completed Feb. 29 Cooking Dept., 8,900 units at $3.80 Feb. 29 Direct labor Feb. 29 Factory overhead Feb. 29 Finished goods Feb. 29 Bal., 650 units, 90% completed If an amount is zero, leave it blank or enter "0". Round cost per unit answers to the nearest cent. 2.Provide the same information for March by recording the March transactions in the four-column work in process account. Construct a cost of production report, and present the March computations (a through d) listed in part (1). If an amount box does not require an entry, leave it blank or enter "0". 3.Comment on the change in costs per equivalent unit for January through March for direct materials and conversion costs

Explanation / Answer

Equivalent units using weighted average method: Completed and transferred = 10000 * 100 % = 10000 In process = 10000 * 50 % = 5000 Equivalent units = 15000 units When computing equivalent units using the weighted average method, ignore the beginning inventory. Finished and transferred should be given one hundred percent completion rate. In process shall be multiplied by its corresponding completion rate.

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