Venus Chocolate Company processes chocolate into candy bars. The process begins

Question

Venus Chocolate Company processes chocolate into candy bars. The process begins by placing direct materials (raw chocolate, milk, and sugar) into the Blending Department. All materials are placed into production at the beginning of the blending process. After blending, the milk chocolate is then transferred to the Molding Department, where the milk chocolate is formed into candy bars. The following is a partial work in process account of the Blending Department at March 31, 2016:

Required:

1. Prepare a cost of production report, and identify the missing amounts for Work in Process—Blending Department. If an amount is zero, enter "0". When computing cost per equivalent units, round to two decimal places.

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2. Assuming that the March 1 work in process inventory includes $16,000 of direct materials, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between February and March. If required, round your answers to the nearest cent.

ACCOUNT Work in Process—Blending Department ACCOUNT NO. Date Item Debit Credit Balance Debit Credit Mar. 1 Bal., 5,000 units, 4/5 completed 19,600 31 Direct materials, 200,000 units 660,000 679,600 31 Direct labor 127,600 807,200 31 Factory overhead 31,920 839,120 31 Goods transferred, 201,000 units ? 31 Bal., ? units, 3/5 completed ?

Explanation / Answer

Venus Chocolate Company Cost of Production Report-Blending Department For the Month Ended March 31, 2016 Unit Information Units charged to production: Inventory in process, March 1 Received from materials storeroom Total units accounted for by the Blending Department Units to be assigned costs: Equivalent Units Whole Units Direct Materials Conversion Inventory in process, March 1 5000 0 1000 Started and completed in March 196000 196000 196000 Transferred to Molding Department in March 201000 196000 197000 Inventory in process, March 31 4000 4000 2400 Total units to be assigned costs 205000 200000 199400 Cost Information Costs per equivalent unit: Direct Materials Conversion Total costs for March in Blending Department 660000 159520 Total equivalent units 200000 199400 Cost per equivalent unit 3.3 0.8 Costs charged to production: Direct Materials Conversion Total Inventory in process, March 1 19600 Costs incurred in March 819520 Total costs accounted for by the Blending Department 839120 Cost allocated to completed and partially completed units: Inventory in process, March 1 balance 19600 To complete inventory in process, March 1 0 800 800 Cost of completed March 1 work in process 20400 Started and completed in March 646800 156800 803600 Transferred to Molding Department in March 824000 Inventory in process, March 31 13200 1920 15120 Total costs assigned by the Blending Department 839120 Increase or Decrease Amount Change in direct materials cost per equivalent unit Increase 0.1 Change in conversion cost per equivalent unit Decrease 0.1

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