The Cutting Department of Karachi Carpet Company provides the following data for

Question

The Cutting Department of Karachi Carpet Company provides the following data for January. Assume that all materials are added at the beginning of the process.

Work in process, January 1, 9,000 units, 60% completed

$87,480*

    *Direct materials (9,000 × $7.2)

$64,800

    Conversion (9,000 × 60% × $4.2)

22,680

$87,480

Materials added during January from Weaving Department, 138,800 units

$1,020,180

Direct labor for January

267,669

Factory overhead for January

327,150

Goods finished during January (includes goods in process, January 1), 140,400 units

—

Work in process, January 31, 7,400 units, 45% completed

—

a. Prepare a cost of production report for the Cutting Department. If an amount is zero or a blank, enter in "0". For the cost per equivalent unit computations, round your answers to two decimal places.

Karachi Carpet Company

Cost of Production Report-Cutting Department

For the Month Ended January 31

Unit Information

Units charged to production:

Inventory in process, January 1

Received from Weaving Department

Total units accounted for by the Cutting Department

Units to be assigned costs:

Equivalent Units

Whole Units

Direct Materials

Conversion

Inventory in process, January 1

Started and completed in January

Transferred to finished goods in January

Inventory in process, January 31

Total units to be assigned cost

Cost Information

Cost per equivalent unit:

Direct Materials

Conversion

Total costs for January in Cutting Department

$

$

Total equivalent units

Cost per equivalent unit

$

$

Costs assigned to production:

Direct Materials

Conversion

Total

Inventory in process, January 1

$

Costs incurred in January

Total costs accounted for by the Cutting Department

$

Costs allocated to completed and partially completed units:

Inventory in process, January 1 balance

$

To complete inventory in process, January 1

$

$

Cost of completed January 1 work in process

$

Started and completed in January

$

Transferred to finished goods in January

$

Inventory in process, January 31

Total costs assigned by the Cutting Department

$

b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (December). If required, round your answers to two decimal places.

Increase or Decrease

Amount

Change in direct materials cost per equivalent unit

$

Change in conversion cost per equivalent unit

$

Work in process, January 1, 9,000 units, 60% completed

$87,480*

    *Direct materials (9,000 × $7.2)

$64,800

    Conversion (9,000 × 60% × $4.2)

22,680

$87,480

Materials added during January from Weaving Department, 138,800 units

$1,020,180

Direct labor for January

267,669

Factory overhead for January

327,150

Goods finished during January (includes goods in process, January 1), 140,400 units

—

Work in process, January 31, 7,400 units, 45% completed

—

Explanation / Answer

FIFO method Beggining units 9000 Transferred out 1,40,400 Started into production 138800 Ending units 7,400 147800 147800 Equivalent units Material Conversion Beginning units 9000 9000 Completion in current period 0% 40% A 0 3600 Units started and completed 131400 131400 Completion 100% 100% B 131400 131400 Ending Units 7,400 7,400 Completion 100% 45% C 7400 3330 Total units A+B+C 138800 138330 Cost per equivalent units Per unit cost Cost Total units Per unit cost Material cost 1020180 138800 7.35 Conversion cost 594819 138330 4.30 Total 1614999 11.65 Cost of goods sold Material convertion cost Beginning work in progress A 64800 22680 87480 Beginning inventory completed Completion 0% 40% Per unit cost 7.35 4.30 Units 9000 9000 Total cost   B 0 15480 15480 Units started and completed Completion 100% 100% Per unit cost 7.35 4.30 Units 131400 131400 Total cost    C 965790 565020 1530810 Total cost A+B+C 1030590 580500 1633770 Ending work in progress Completion 100% 45% Per unit cost 7.35 4.30 Units 7,400 7,400 Total cost     54390 14319 68709 Total cost accounted for 1702479 Cost per equivalent unit Material Conversion cost For current period 7.35 4.30 For beginning inventory 7.2 4.20 increase (decrease) 0.15 0.10

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