t terials, determine the increase or decrease in the cost per equivalent materia
ID: 2554477 • Letter: T
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t terials, determine the increase or decrease in the cost per equivalent materials and conversion between February and March. in pru unit ect 2. Assuming that the March 1 work ma for direc PR 18-3A White Star Flour Company manufactures flour by a series of three pro with wheat grain being introduced in the Milling Department. From the es ment, the materials pass through the Sifting and Packaging departments, packaged refined flour Equivalent units and related costs; cost of production report; entries o emerging as The balance in the account Work in Process-Sifting Department was May 1, 2012 as follows on Work in Process-Sifting Department (800 units, completed): Direct materials (800x $2.25) Conversion (800 × ? × $0.65) $1,800 312 $2,112 The following costs were charged to Work in Process-Sifting Department Direct materials transferred from Milling Department: 14,200 units at $2.35 a unit Direct labor Factory overhead $33,370 6,100 3,924 During May, 14,000 units of flour were completed. Work in Process-Sifting Department on May 31 was 1,000 units, s completed. Instructions 1. Prepare a cost of production report for the Sifting Department for May 2. Journalize the entries for costs transferred from Milling to Sifting and the costs trans- ferred from Sifting to Packaging. 3. Determine the increase or decrease in the cost per equivalent unit from April to May for direct materials and conversion costs. 4. Discuss the uses of the cost of production report and the results of part (3)Explanation / Answer
Answer 1. WHITE STAR FLOUR COMOANY Cost of Production Report - Sifting Department For the Month ended May 31 Particulars Equivalent Units Physical Units Materials Conversion Costs Units Information Units Charged to Production Work in process - Beginning 800 Started into production 14,200 Total units 15,000 Units accounted for Goods Units Completed & transferred out: From Beginning WIP 800 - 320 (0% materials, 40% conversion costs) Started & Completed (14,000 - 800) 13,200 13,200 13,200 Work in process, Ending 1,000 1,000 800 (100% materials, 80% conversion costs) Equivalent units accounted for 15,000 14,200 14,320 Materials Conversion Costs Total Total Cost to Account for: WIP, Beginning 1,800 312 2,112 Cost added in current period 33,370 10,024 43,394 Total cost to be account for 35,170 10,336 45,506 Cost added in current period 33,370 10,024 43,394 Equivalent Units of work done in current Period 14,200 14,320 Cost per Equivalent Unit 2.35 0.70 3.05 Assignment of Costs: Goods Units and Completed out (14,000 Units) WIP, Beginning - 800 Units - - 2,112 Cost added to Beg. WIP in Current period - 224 224 (320 Units X $0.70) Total of Beginning Inventory - 224 2,336 Started and completed - 13,200 Units 31,020 9,240 40,260 (13,200 units X $2.35) (13200 Units X $0.70) Total Cost of good units completed & transferred out 31,020 9,464 42,596 WIP, Ending - 1,000 Units 2,350 560 2,910 (1,000 units X $2.35) (800 Units X $0.70) Total Cost accounted For 33,370 10,024 45,506 Answer 2. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1 WIP - Sifting 33,370.00 WIP - Milling 33,370.00 (record the inventory transferred) 2 WIP - Packaging 42,596.00 WIP- Sifting 42,596.00 (record the finsihed goods produced) Answer 3. Calculation of Cost per Unit - Jan 1 Materials Conversion Costs Total WIP - Jan 1, Cost 1,800 312 2,112 Equivalent No. of Unit - WIP - Jan 1 800 480 Cost pet Equivalent Unit 2.25 0.65 2.90 Materials Conversion Costs Total Cost per Equivalent Unit - Beginning Inventory 2.25 0.65 2.90 Cost per Equivalent Unit -May 2.35 0.70 3.05 Increase (Decrease) in Cost per Unit 0.10 0.05 0.15 Answer 4. The cost of production report may be used as the basis for allocating product costs between (A or B) Work-in-Process and (A or B) 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.
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