Equivalent Units and Related Costs; Cost of Production Report; Entries Lily Flou

Question

Equivalent Units and Related Costs; Cost of Production Report; Entries

Lily 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.

During July, 12,000 units of flour were completed. Work in Process—Sifting Department on July 31 was 1,000 units, 45 completed.

Required:

1. Prepare a cost of production report for the Sifting Department for July. If an amount is zero, enter "0". If required, round your cost per equivalent unit answers to the nearest cent.

Lily Flour Company

Cost of Production Report-Sifting Department

For the Month Ended July 31, 2014

Inventory in process, July 1

Received from Milling Department

Total units accounted for by the Sifting Department

Equivalent Units

Whole Units

Direct Materials

Conversion

Inventory in process, July 1

Started and completed in July

Transferred to Packaging Department in July

Inventory in process, July 31

Total units to be assigned costs

Direct Materials

Conversion

Total costs for July in Sifting Department

$

$

Total equivalent units

Cost per equivalent unit

$

$

Direct Materials

Conversion

Total

Inventory in process, July 1

$

Costs incurred in July

Total costs accounted for by the Sifting Department

$

Cost allocated to completed and partially completed units:

Inventory in process, July 1 balance

$

To complete inventory in process, July 1

$

$

Cost of completed July 1 work in process

$

Started and completed in July

Transferred to Packaging Department in July

$

Inventory in process, July 31

Total costs assigned by the Sifting Department

$

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2. Journalize the entries for (1) costs transferred from Milling to Sifting and (2) the costs transferred from Sifting to Packaging.

(1)

(2)

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3. Determine the increase or decrease in the cost per equivalent unit from June to July 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

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.

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Hint(s)

1. Prepare a cost of production report for the Sifting Department for July. If an amount is zero, enter "0". If required, round your cost per equivalent unit answers to the nearest cent.

Lily Flour Company

Cost of Production Report-Sifting Department

For the Month Ended July 31, 2014

Unit Information Units charged to production:

Inventory in process, July 1

Received from Milling Department

Total units accounted for by the Sifting Department

Units to be assigned costs:

Equivalent Units

Whole Units

Direct Materials

Conversion

Inventory in process, July 1

Started and completed in July

Transferred to Packaging Department in July

Inventory in process, July 31

Total units to be assigned costs

Cost Information Costs per equivalent unit:

Direct Materials

Conversion

Total costs for July in Sifting Department

$

$

Total equivalent units

Cost per equivalent unit

$

$

Costs charged to production:

Direct Materials

Conversion

Total

Inventory in process, July 1

$

Costs incurred in July

Total costs accounted for by the Sifting Department

$

Cost allocated to completed and partially completed units:

Inventory in process, July 1 balance

$

To complete inventory in process, July 1

$

$

Cost of completed July 1 work in process

$

Started and completed in July

Transferred to Packaging Department in July

$

Inventory in process, July 31

Total costs assigned by the Sifting Department

$

Explanation / Answer

Question 1. Units Charged to Production: Inventory in Process, July 1 700 Received from Milling Department 12300 Total Units Accounted for by the Shifting Department 13000 Units t be assigned Costs: Equivalent Units Whole Unit Direct Material Conversions Inventory in process, July 1 700 700 420 Started and Completed 12300 12300 12300 Transferred to packing Department in July 12000 12000 12000 Inventory in process, July 31 1000 1000 800 Total units to be assigned cost 13000 13000 12800 Cost information Cost per uquivalant unit: Direct Material Conversions Total Cost for July in Shifting Department 33786 7659 Total Equivalent Units 13000 12800 Cost per equivalent unit 2.598923 0.598359 Cost Charged to Production: Direct Material Conversions Inventory in process, July 1 1806 231 Cost incurred in July 31980 7428 Total Cost Accounted for by the shifting department 33786 7659 cost allocated to completed and partially completed units: Inventory in process, July 1 1806.00 231.00 To complete inventory in process July 1 13.25 187.85 Cost completed July 1 Work in process 1819.25 418.85 Started and completed in July 29367.83 6761.46 Inventory in process, July 31 2598.92 478.69 Total Cost assigned by shifting Department. 33786.00 7659.00 Question 2.1 Shifting Department Process 31980.00 Milling Department Process 31980.00 Question 2.2 Packing Department Process 36129.29 Shifting Department Process 36129.29 Question 3. Direct Material cost per unit in June 2.58 Direct Material cost per unit in July 2.598923 Increase in cost per unit 0.018923 Conversion cost per unit in June 0.55 Conversion cost per unit in July 0.598359 Increase in cost per unit 0.048359

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