Equivalent Units and Related Costs; Cost of Production Report; Entries Dover Che
ID: 2337232 • 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, 70,400 units of specialty chemicals were completed. Work in Process—Filling Department on January 31 was 6,100 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.
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1. Calculate equivalent units for materials and conversion costs. Calculate the cost per equivalent unit for materials and conversion costs. Calculate the costs assigned to the beginning inventory, the units started and completed, and the ending inventory.
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 December to January for direct materials and conversion costs. If required, round your answers to two decimal places.
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 Work in Process and 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.
Work in Process—Filling Department (5,500 units, 30% completed): Direct materials (5,500 x $12.3) $67,650 Conversion (5,500 x 30% x $8) 13,200 $80,850Explanation / Answer
Cost of Production report Units charged to production: Inventory in process at beginning 5500 Received from Reaction deptt 71000 Total units accounted 76500 Whole Units Material Conversion Inventory in Beginning 5500 0 3850 Started and completed 64900 64900 64900 Transferred to FG 70400 64900 68750 Inventory in end 6100 6100 1830 Total Units to be assigned cost 76500 71000 70580 Cost per Equivalent units Material Conversion Total cost in Filling deptt 859100 578756 Total Equivalent units 71000 70580 Cost per Equivalent unit 12.1 8.2 Cost assigned to production: Material Conversion Total Inventory in beginning 67650 13200 80850 Cost incurred in Jan 859,100 578756 1,437,856 Total cost accounted 926750 591956 1518706 Cost allocated to completed and partially completed units: Inventory in beginning 80850 To complete inventory in process 0 31570 31570 Cost of completed Jan1 WIP 112420 Started and completed in Jan 785290 532180 1317470 Transferred to FG 1429890 Inventory in process Ending 73810 15006 88816 Total cost assigned 1518706 Req 2. Journal entries: 1 Work in process- Filling deptt Dr. 859100 Work in process-Reaction deptt 859100 2 Finished Goods inventory Dr. 1429890 Work in process-Filling deptt 1429890 Req 3. Inc/Dec Amount Change in material cost per unit Decrease 0.2 Change in conversion cost per unit Increase 0.2
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