Equivalent Units and Related Cost; Cost of Production Reports; Entries. Problem-

Question

Equivalent Units and Related Cost; Cost of Production Reports; Entries.

Problem-Solving Strategy Wilmington 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 December 1, 2014: Work in Process-Filling Department (3,400 units, 60% completed) Direct materials (3,400 x $18.70) Conversion (3,400 x 60% x $12.20) 24,888 $88,468 Direct materials transferred from Reaction $812,150 266,730 256,270 Department: 43,900 units at $18.50 a unit 41,500 units of sped alychemicals were completed work in process-Filing Department on December 31 was 3,800 units, 10% completed. . Prepare a cost of production report for the Filling Department for December. If an amount is zero, enter "o. If required, round your cost per equivalent unit answers to two decimal 120

Explanation / Answer

UNIT INFORMATION: units charged to production: WIP Dec 1 3400 Received from reaction 43900 Total units accounted for 47300 Units to be assigned costs: Equivalent Units Whole units Direct Material Conversion WIP Dec 1 3400 0 1360 40% Started and completed 40100 40100 40100 Transferred to Finished Goods in Dec 43500 WIP Dec 31 3800 3800 380 Total units to assigned costs 43900 41840 COST INFORMATION: Direct Materials Conversion Total cost incurred in filling deptt. 812150 523000 Total Equivalent units 43900 41840 Cost per equivalent unit $18.50 $12.50 COSTS CHARGED TO PRODUCTION: Direct Mat. conversion Total cost on WIP Dec 1 63580 24888 88468 cost incurred in Dec in filling deptt. 812150 523000 1335150 Total cost accounted for 1423618 Cost allocated to completed and partially completed units: WIP Dec 1 $88468 To complete WIP Dec 1 0 17000 $17000 Cost of completed Dec 1 WIP $105468 Started and completed in Dec 741850 501250 1243100 Tranferred to Finished Goods in Dec 1348568 WIP Dec 31 70300 4750 75050 Total cost assigned by the filling deptt. 1423618 2. JOURNAL ENTRIES: DEBIT $ CREDIT $ (I) costs transferred from Reaction deptt.: Work in process 812150 Reaction Deptt. transfer 812150 (100% Direct Material) (II) Cost transferrd from Filling to Finished Goods: Finished Goods Inventory 1348568 Work in Process Inventory 1348568 3. Determine the increase or decrease in cost per equivalent unit from Nov to Dec: Increase / Decrease Amount $ Change in Direct Material cost / Equivalent unit Decrease 0.20 Change in Conversion cost / equivalent unit Increase 0.30

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