Equivalent units and related costs; cost of production report; entries Dover Che
ID: 2469579 • 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, 2016: The following costs were charged to Work in Process-Filling during January: During January, 53,000 units of specialty chemicals were completed. Work in Process Filling Department on January 31 was 2,700 units, 30% completed. Prepare a cost of production report for the Filling Department for January. Journalize the entries for costs transferred from Reaction to Filling and the costs transferred from Filling to Finished Goods. Determine the increase or decrease in the cost per equivalent unit from December to January for direct materials and conversion costs. Discuss the uses of the cost of production report and the results of part (3).Explanation / Answer
Beginning WIP 3,400 completed 53,000 Started 52,300 Ending WIP 2,700 units to be accounted 55,700 units accounted for 55,700 Equivalent unit units materials conversion completed 53,000 53,000 53,000 Ending wip 2,700 2,700 810 Total units 55,700 55,700 53,810 Cost and cost per unit Materials conversion Total Beginning cost 32,572 7,956 40,528 Added during the year 496,850 196726 693,576 Total cost 529,422 204,682 734,104 Cost per unit 9.504883 3.803791 13.30867 cost transferred to finished goods materials 503759 Conversion 201601 Total 705360 (the little difference may be due to rounding ) Cost of Ending WIP materials 25663 Conversion 3081 Total 28744 1) cost production report Beginning WIP 40,528 Added 693,576 total cost to be accounted 734,104 Cost transferred 705360 Ending wIP 28744 cost accounted for 734104 2) journal entries debit credit Finished goods inventory 693,576 To WIP inventory 693,576 (transferred from reaction) Finishded goods 705360 To WIP invetnroy 705360 3) decrease in material cost 9.58 - 9.50 = .08 per unit Decrease in conversion 3.90 - 3.80 = .10 per unit cost transferred to finished goods materials 503759 Conversion 201601 Total 705360 (the little difference may be due to rounding ) Cost of Ending WIP materials 25663 Conversion 3081 Total 28744 1) cost production report Beginning WIP 40,528 Added 693,576 total cost to be accounted 734,104 Cost transferred 705360 Ending wIP 28744 cost accounted for 734104 2) journal entries debit credit Finished goods inventory 693,576 To WIP inventory 693,576 (transferred from reaction) Finishded goods 705360 To WIP invetnroy 705360 3) decrease in material cost 9.58 - 9.50 = .08 per unit Decrease in conversion 3.90 - 3.80 = .10 per unit
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