Dover Chemical Company manufactures specialty chemical by a series of three proc

Question

Dover Chemical Company manufactures specialty chemical 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 separtments, emerging as finished chemicals,

The balance in the account Work in Process-Filling was as follows

Work in Process- Filling Department

(3,400 units, 60% completed):

Direct Materials $32,520

Conversion (3,400x60%x3.90) 7956

40520

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

Direct Materias transferres from Reaction

Department: 52,300 units at 9.50 a unit $ 496,850

Direct Labor 101,560

Factory overhead 95,166

During January 53,00 units of specialty chemicals were completed. Work in Process-Filling Department on January 31 was 2,700 units 30% completed

Instructions

1- Prepare a cost of production report for the Filling Department for January

2- Journalize 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 fro direct materials and conversion costs

4- Discuss the uses of the cost of production report and the results of part (3)

Explanation / Answer

Solution 1:

Solution 2:

Solution 3:

Change in equivalent cost per unit of material from december to Janauary = $9.56 - $9.50 = $0.06 Decrease

Change in equivalent cost per unit of conversion from december to Janauary = $3.90 - $3.80 = $0.10 decrease

Solution 4:

Cost of production report is used to identify the value of cost of goods completed and cost of goods in ending WIP. It also helps production manager to identify and control the cost over the period. For example in part 3, we have identified material cost and conversion cost was reduced in this period from previous periods.

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 (25700+2600-2300) 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

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.