White Diamond Flour Company manufactures flour by a series of three processes, b
ID: 2566896 • Letter: W
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, 2016:
The following costs were charged to Work in Process-Sifting Department during July:
Chart of Accounts
Cost of Production Report
1. Prepare a cost of production report for the Sifting Department for July.
Journal
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.
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JOURNAL
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Final Questions
3. Determine the increase or decrease in the cost per equivalent unit from June to July for direct materials and conversion costs.
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.
Please show the calculations!!
Work in Process-Sifting Department (600 units, completed): Direct materials (600 × $2.25) $1,350 Conversion (600 × × $0.40) 144 $1,494Explanation / Answer
1. Prepare a cost of production report for the Sifting Department for July. WHITE DIAMOND FLOUR COMPANY Cost of Production Report-Sifting Department For the Month Ended July 31, 2016 UNITS Whole Units Equivalent Units Direct Materials Conversion Units charged to production: Inventory in process, July 1 600 Received from Milling Department 15400 Total units accounted for by the Sifting Department 16000 Units to be assigned costs: Inventory in process, July 1 ( 2/5 completed here) 600 0 240 Started and completed in July 13800 13800 13800 Transferred to Packaging Department in July 14400 13800 14040 Inventory in process, July 31 ( 4/)completed here) 1600 1600 1280 Total units to be assigned costs 16000 15400 15320 COSTS Costs Direct Materials Conversion Total Costs per equivalent unit: Total costs for July in Sifting Department 36190 6894 43084 Total equivalent units 15400 15320 Cost per equivalent unit 2.35 0.45 2.8 Costs assigned to production: Inventory in process, July 1 1350 144 1494 Costs incurred in July 36190 6894 43084 Total costs accounted for by the Sifting Department 37540 7038 44578 Cost allocated to completed and partially completed units: Inventory in process, July 1 balance 1350 144 1494 To complete inventory in process, July 1 0 108 108 Cost of completed July 1 work in process 1350 252 1602 Started and completed in July 32430 6210 38640 Transferred to Packaging Department in July 33780 6462 40242 Inventory in process, July 31 3760 576 4336 Total costs assigned by the Sifting Department 37540 7038 44578 2. Journal Entries for: costs transferred from Milling to Sifting Work in Process-Sifting Department 43084 Work in Process-Milling Department 43084 (36190+4420+2474) costs transferred from Sifting to Packaging Work in Process-Packaging Department 40242 Work in Process-Sifting Department 40242 3. Determine the increase or decrease in the cost per equivalent unit from June to July for direct materials and conversion costs. June July Increase Direct Materials 2.25 2.35 0.1 Conversion 0.4 0.45 0.05 4. The cost of production report may be used as the basis for allocating product costs between WIP 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.
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