Dover Chemical Company manufactures specialty chemicals by a series of three pro

Question

Dover Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the distilling deptartment. From the distilling deptartment, the materials pass through the reaction and filling deptartments, emerging as finished chemicals.

The balance in the account Work in Progress- Filling was as follows on January 1,2016:

Work in Progress- Filling Deptartment

(3400 units, 60% completed):

Direct materials (3400 x $9.58)

Conversion (3400 x 60% x $3.90)

$32572

$7956

40528

The following costs were charged to Work in Progress- Filling during January:

Direct materials transfered from Reaction

     Department:52300 units at $9.50 a unit

Direct labor

Factory overhead

496850

101560

95166

During January, 53000 units of specialty chemicals were completed. Work in Process- Filling Department on January 31 was 2700 units, 30% completed.

1. Prepare a cost of production report for the filling deptartment for January

2. Journalize the entries for costs transferred from Reaction to Filling and the costs 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.

Explanation / Answer

Solution 1:

Solution 2:

Solution 3:

Change in cost per equivalent unit from December to January for direct materiial = $9.58 - $9.50 = $0.08 Decrease

Change in cost per equivalent unit from December to January for conversion = $3.90 - $3.80 = $0.10 Decrease

Dover Chemical Company Filling Department Computation of Equivalent unit (FIFO) Particulars Physical units Material Conversion Units to be accounted for: Beginning WIP Inventory 3400 Units started this period 52300 Total unit to be accounted for 55700 Units Accounted for: Units completed and transferred out From beginning inventory
Material - 0%
Conversion - 40% 3400 0 1360 Started and completed currently 49600 49600 49600 Transferred to finished goods 53000 49600 50960 Units in ending WIP
Material - 100%
Conversion - 30% 2700 2700 810 Total units accounted for 55700 52300 51770

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