Equivalent Units and Related Costs; Cost of Production Report; Entries Dover Che
ID: 2610569 • Letter: E
Question
Equivalent Units and Related Costs; Cost of Production Report; Entries
Dover Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling departments, emerging as finished chemicals.
The balance in the account Work in Process—Filling was as follows on January 1:
The following costs were charged to Work in Process—Filling during January:
During January, 56,300 units of specialty chemicals were completed. Work in Process—Filling Department on January 31 was 4,900 units, 90% completed.
Required:
1. Prepare a cost of production report for the Filling Department for January. If an amount is zero, enter "0". If required, round your cost per equivalent unit answers to two decimal places.
2. Journalize the entries for (1) costs transferred from Reaction to Filling and (2) the cost transferred from Filling to Finished Goods.
3. Determine the increase or decrease in the cost per equivalent unit from November to January for direct materials and conversion costs. If required, round your answers to two decimal places.
4. The cost of production report may be used as the basis for allocating product costs between (A or B)_______ and (A or B)_______ . 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.
A. Direct Materials
B. Work in Process
Work in Process—Filling Department (4,400 units, 80% completed): Direct materials (4,400 x $12.3) $54,120 Conversion (4,400 x 80% x $8) 28,160 $82,280Explanation / Answer
Answer 1. Dover Chemical Company Cost of Production Report - Filling Department For the Month ended Jan 31 Particulars Equivalent Units Physical Units Materials Conversion Costs Units Information Units Charged to Production Work in process - Beginning 4,400 Started into production 56,800 Total units 61,200 Units accounted for Goods Units Completed & transferred out: From Beginning WIP 4,400 - 880 (0% materials, 20% conversion costs) Started & Completed (56,300 - 4,400) 51,900 51,900 51,900 Work in process, Ending 4,900 4,900 4,410 (100% materials, 90% conversion costs) Equivalent units accounted for 61,200 56,800 57,190 Materials Conversion Costs Total Total Cost to Account for: WIP, Beginning 54,120 28,160 82,280 Cost added in current period 687,280 480,396 1,167,676 Total cost to be account for 741,400 508,556 1,249,956 Cost added in current period 687,280 480,396 1,167,676 Equivalent Units of work done in current Period 56,800 57,190 Cost per Equivalent Unit 12.10 8.40 20.50 Assignment of Costs: Goods Units and Completed out (56,300 Units) WIP, Beginning -4,400 Units - - 82,280 Cost added to Beg. WIP in Current period - 7,392 7,392 (880 Units X $8.40) Total of Beginning Inventory - 7,392 89,672 Started and completed - 23,400 Units 627,990 435,960 1,063,950 (51,900 units X $12.10) (51,900 Units X $8.40) Total Cost of good units completed & transferred out 627,990 443,352 1,153,622 WIP, Ending - 4,900 Units 59,290 37,044 96,334 (4,900 units X $12.10) (4,410 Units X $8.40) Total Cost accounted For 687,280 480,396 1,249,956 Answer 2. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1 WIP - Filling 687,280.00 WIP - Reaction 687,280.00 (record the inventory transferred) 2 Finished Goods Inventory 1,153,622.00 WIP- Filling 1,153,622.00 (record the finsihed goods produced) Answer 3. Calculation of Cost per Unit - Jan 1 Materials Conversion Costs Total WIP - Jan 1, Cost 54,120 28,160 82,280 Equivalent No. of Unit - WIP - Jan 1 4,400 3,520 Cost pet Equivalent Unit 12.30 8.00 20.30 Materials Conversion Costs Total Cost per Equivalent Unit - Beginning Inventory 12.30 8.00 20.30 Cost per Equivalent Unit -Jan 12.10 8.40 20.50 Increase (Decrease) in Cost per Unit (0.20) 0.40 0.20 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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