Hearty Soup Co. uses a process cost system to record the costs of processing sou

Question

Hearty Soup Co. uses a process cost system to record the costs of processing soup, which requires the cooking and filling processes. Materials are entered from the cooking process at the beginning of the filling process. The inventory of Work in Process-Filling on April 1 and debits to the account during April were as follows Bal., 1,000 units, 30% completed Direct materials (1,000 x $4.20) Conversion (1,000 x 30% x $1.75) $4,200 525 $4,725 From Cooking Department, 7,500 units $32,250 Direct labor 8,542 Factory overhead 2,854 During April, 1,000 units in process on April 1 were completed, and of the 7,500 units entering the department, all were completed except 600 units that were 90% completed. Charges to Work in Process-Filling for May were as follows From Cooking Department, 9,700 units $43,650 Direct labor Factory overhead 12,046 3,154 During May, the units in process at the beginning of the month were completed, and of the 9,700 units entering the department, all were completed except 400 units that were 35% completed Required 1. (a) Enter the balance as of April 1, in a four-column account for Work in Process-Filling. Record the debits and the credits in the account for April. (b) Construct a cost of production report, and present computations for determining i. equivalent units of production for materials and conversion. 1. costs per equivalent unit." ii. cost of goods finished, differentiating between units started in the prior period and units started and finished in April. iv. work in process inventory. If an amount is zero, enter "O". Round your cost per unit answers to the nearest cent and final answers to the nearest dollar amount. 2. (a) Provide the same information for May by recording the May transactions in the four-column work in process account. (b) Construct a cost of production report, and present the May computations i through iv) listed in part 1(b). 3. Comment on the change in costs per equivalent unit for March through May for direct materials and conversion costs.

Explanation / Answer

Solution:

1&2 a) Entering the Balance as of April 1 in a four column account for Work in Process Filling:

1 b) Constructing the Cost of Production Report and Presenting the Computations:

HEARTY SOUP CO.

Cost of Production Report - Filling Department

For the Month Ended April 30

1) 1,000 units * (1 – 30%)

2) 7,500 units - 600 units

3) 600 units * 90%

1) $8,542 + $2,854

2) $32,250 + $8,542 + $2,854

3) 700 units × $1.40

4) 6,900 units * $4.30

5) 6,900 units * $1.40

6) 600 units * $4.30

7) 540 units * $1.40

2) Constructing the Cost of Production Report and Presenting the Computations:

HEARTY SOUP CO.

Cost of Production Report - Filling Department

For the Month Ended May 31

1) 600 units * (1 – 90%)

2) 9,700 units - 400 units

3) 400 units * 35%

1) $12,046 + $3,154

2) $43,650 + $12,046 + $3,154

3) 60 units × $1.60

4) 9,300 units * $4.50

5) 9,300 units * $1.60

6) 400 units * $4.50

7) 140 units * $1.60

Work in Process - Filling Date Balance Item Dr. Cr. Dr. Cr. Apr. 1 Bal., 1,000 units, 30% completed $4,725 30 Cooking Dept., 7,500 units at $4.30 $32,250 $36,975 30 Direct Labor $8,542 $45,517 30 Factory overhead $2,854 $48,371 30 Finished goods $45,035 $3,336 30 Bal., 600 units, 90% completed $3,336 May 31 Cooking Dept., 9,700 units at $4.50 $43,650 $46,986 31 Direct labor $12,046 $59,032 31 Factory overhead $3,154 $62,186 31 Finished goods $60,162 $2,024 31 Bal., 400 units, 35% completed $2,024

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