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., 800 units, 30% completed:

Direct materials (800 × $4.40)

$3,520

Conversion (800 × 30% × $1.75)

420

$3,940

From Cooking Department, 7,700 units

$34,650

Direct labor

8,540

Factory overhead

4,580

During April, 800 units in process on April 1 were completed, and of the 7,700 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, 9,500 units

$44,650

Direct labor

12,000

Factory overhead

4,916

During May, the units in process at the beginning of the month were completed, and of the 9,500 units entering the department, all were completed except 250 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.

ii.

costs per equivalent unit.*

iii.

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 "0". 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.

Bal., 800 units, 30% completed:

Direct materials (800 × $4.40)

$3,520

Conversion (800 × 30% × $1.75)

420

$3,940

From Cooking Department, 7,700 units

$34,650

Direct labor

8,540

Factory overhead

4,580

Explanation / Answer

APRIL MONTH UNITS TO ACCOUNT FOR: Beginning Work in Process units 800 Add: Units Started in Process 7,700 Total Units to account for: 8,500 UNITS TO BE ACCOUNTED FOR: Units completed from Beginning WIP 800 Units started and completed 7,100 Ending Work in Process 600 Total Units to be accounted for: 8,500 Equivalent Units: Material Cost Conversion % Completion Units % Completion Units Units completed from Beg. WIP 0% 0 70% 560 Units started and completed 100% 7,100 100% 7,100 Ending Work in Process 100% 600 90% 540 Total Equivalent units 7,700 8,200 COST PER EQUIVALENT UNIT: Material Conversion Total cost added during the year 34,650 13,120 Equivalent Units 7,700 8,200 Cost per Equivalent unit 4.5 1.6 TOTAL COST ACCOUNTED FOR: Units Completed from Beginning WIP (800 units) Equivalent unit Cost per EU Total Cost Beginning Cost 3940 Material 0 4.5 0 Conversion Cost 560 1.6 896 Cost of units completed from Beg WIP 4836 Units started and Transferred out (7,100 units) Equivalent unit Cost per EU Total Cost Material 7,100 4.5 31950 Conversion Cost 7,100 1.6 11360 Total Cost of Units completed and transferred out: 43310 Ending Work in process (600 units) Equivalent unit Cost per EU Total Cost Material 600 4.5 2700 Conversison Cost 540 1.6 864 Total cost of Ending Work in process: 3,564 WORK IN PROCESS INVENTORY-FILLING Balance 3,940 Finished Goods inv. 48,146 Raw material Inv. 34,650 Wages Payable 8,540 Manufacturing Overheads 4,580 Balance 3,564 MAY MONTH UNITS TO ACCOUNT FOR: Beginning Work in Process units 600 Add: Units Started in Process 9,500 Total Units to account for: 10,100 UNITS TO BE ACCOUNTED FOR: Units completed from Beginning WIP 600 Units started and completed 9,250 Ending Work in Process 250 Total Units to be accounted for: 10,100 Equivalent Units: Material Cost Conversion % Completion Units % Completion Units Units completed from Beg. WIP 0% 0 10% 60 Units started and completed 100% 9,250 100% 9,250 Ending Work in Process 100% 250 35% 88 Total Equivalent units 9,500 9,398 COST PER EQUIVALENT UNIT: Material Conversion Total cost added during the year 44,650 16,916 Equivalent Units 9,500 9,398 Cost per Equivalent unit 4.7 1.8 TOTAL COST ACCOUNTED FOR: Units Completed from Beginning WIP (600 units) Equivalent unit Cost per EU Total Cost Beginning Cost 3564 Material 0 4.7 0 Conversion Cost 60 1.8 108 Cost of units completed from Beg WIP 3672 Units started and Transferred out (9250 units) Equivalent unit Cost per EU Total Cost Material 9,250 4.7 43475 Conversion Cost 9,250 1.8 16650 Total Cost of Units completed and transferred out: 60125 Ending Work in process (250 units) Equivalent unit Cost per EU Total Cost Material 250 4.7 1175 Conversison Cost 88 1.8 158 Total cost of Ending Work in process: 1,333 WORK IN PROCESS INVENTORY-FILLING Balance 3,564 Finished Goods inv. 63,797 Raw material Inv. 44,650 Wages Payable 12,000 Manufacturing Overheads 4,916 Balance 1,333 Changes in Cost: Inc/Dec Amount Direct Material Increase 0.2 Conversion cost Increase 0.2

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