Equivalent Units and Related Costs; Cost of Production Report; Entries Dover Che
ID: 2335966 • 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:
Work in Process—Filling Department
(4,900 units, 20% completed):
Direct materials (4,900 x $10.3)
$50,470
Conversion (4,900 x 20% x $6.6)
6,468
$56,938
The following costs were charged to Work in Process—Filling during January:
Direct materials transferred from Reaction
Department: 63,200 units at $10 a unit
$632,000
Direct labor
226,120
Factory overhead
217,260
During January, 62,700 units of specialty chemicals were completed. Work in Process—Filling Department on January 31 was 5,400 units, 30% 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.
Dover Chemical Company
Cost of Production Report-Filling Department
For the Month Ended January 31
Unit Information
Units charged to production:
Inventory in process, January 1
Received from Reaction Department
Total units accounted for by the Filling 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 costs
Cost Information
Cost per equivalent unit:
Direct Materials
Conversion
Total costs for January in Filling 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 Filling 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 Filling Department
$
2. Journalize the entries for (1) costs transferred from Reaction to Filling and (2) the cost transferred from Filling to Finished Goods.
(1)
(2)
3. Determine the increase or decrease in the cost per equivalent unit from December to January for direct materials and conversion costs. 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
$
4. Discuss the uses of the cost of production report and the results of part (3).
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.
Work in Process—Filling Department
(4,900 units, 20% completed):
Direct materials (4,900 x $10.3)
$50,470
Conversion (4,900 x 20% x $6.6)
6,468
$56,938
Explanation / Answer
Solution 1:
Solution 2:
Solution 3:
Change in direct material cost per equivalent unit = $10 - $10.30 = $0.30 Decrease
Change in conversion cost per equivalent unit = $7 - $6.6 = $0.40 increase
Solution 4:
The cost of production report may be used as the basis for allocating product costs between completed units and Ending work in process. 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.
Dover Chemical Company Filling Department Computation of Equivalent unit (FIFO) Particulars Physical units Material Conversion Units to be accounted for: Beginning WIP Inventory 4900 Units started this period 63200 Total unit to be accounted for 68100 Units Accounted for: Units completed and transferred out From beginning inventoryMaterial - 0%
Conversion - 80% 4900 0 3920 Started and completed currently 57800 57800 57800 Transferred to finished goods 62700 57800 61720 Units in ending WIP
Material - 100%
Conversion - 30% 5400 5400 1620 Total units accounted for 68100 63200 63340
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