PR 20-3A Equivalent units and related costs; cost of production report entries O

Question

PR 20-3A Equivalent units and related costs; cost of production report entries OBJ. 2, 3,4 Lily Flour Company manufactures wheat grain being introduced in the Milling Department. From theckaged the materials pass through the Sifting and Packaging department refined flour flour by a series of three processes, beginning with s, emerging as packaged The balance in the account Work in Process-Sifting Department was as follows on July 1, 2014: Work in Process-Sifting Department(700 units, % completed): Direct materials (700 × S2.58) $1.306 231 Conversion (700 x x $0.55) x$0.55) $2,037 The following costs were charged to Work in Process-Sifting Department during July: Direct materials transferred from Milling Department 12,300 units at $2.60 a unit Direct labor Factory overhead 531,980 4,670 2,758 During July, 12,000 units of flour were completed. Work in Process-Sifting Department on July 31 was 1,000 units, % completed. Instructions 1. Prepare a cost of production report for the Sifting Department for July. 2. Journalize the entries for costs transferred from Milling to Sifting and the costs trans- ferred from Sifting to Packaging. 3. Determi ine the increase or decrease in the cost per equivalent unit from June to July for direct materials and conversion costs. 4. Discuss the uses of the cost of production report and the results of part (G)

Explanation / Answer

Solution 1:

Solution 2:

Solution 3:

Change in equivalent cost per unit of direct material from june to july = $2.60 - $2.58 = $0.02 Increase

Change in equivalent cost per unit of conversion cost from june to july = $0.60 - $0.55 - $0.05 increase

Solution 4:

Cost of production reports is used to determine value of cost of goods transferred and value of ending inventory. It also helps in controlling the cost and comparing the cost from one period to another as we did in part 3. This comparison helps to identify any major increase or decrease in cost over the period then reason of the same can by analyzed and responsibility is fixed on concerned department.

Lily Flour Company Sifting Department Computation of Equivalent unit (FIFO) Particulars Physical units Material Conversion Units to be accounted for: Beginning WIP Inventory 700 Units started this period 12300 Total unit to be accounted for 13000 Units Accounted for: Units completed and transferred out From beginning inventory
Material - 0%
Conversion - 2/5 700 0 280 Started and completed currently 11300 11300 11300 Units in ending WIP
Material - 100%
Conversion - 4/5 1000 1000 800 Total units accounted for 13000 12300 12380

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.