Equivalent Units and Related Costs; Cost of Production Report; Entries Dover Che

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: Work in Process-Filling Department (4,400 units, 60% completed): Direct materials (4,400 x $12.7) $55,880 Conversion (4,400 x 60% x S82) 21,648 $77,528 The following costs were charged to Work in Process-Filling during January Direct materials transferred from Reaction Department: 56,800 units at $12.4 a unit $704,320 Direct labor Factory overhead 238,990 229,615 During January, 56,300 units of specialty chemicals were completed. Work in Process Filing Department on January 31 was 4,900 units, 30% completed. 1. Prepare a cost of production report for the Filling Department for January. If an amount is zero, enter "o. If required, round your cost per equivalent unit answers to two decimal places. Dover Chemical Company Units charged to production: nventory in process, January Received from Reaction Department Total units accounted for by the Filling Department Units to be assigned costs Equivalent Units Direct Whole Units Materials Conversion Inventory in process, January 1 Started and completed in January Transferred to finished goods in January Inventory in process, January 31 Total units to be assigned costs Cost per equivalent unit

Explanation / Answer

Solution 1:

Solution 2:

Solution 3:

Change in direct material cost per equivalent unit = $12.40 - $12.70 = $0.30 decrease

Change in conversion cost per equivalent unit = $8.50 - $8.20 = $0.30 increase

Solution 4:

The cost of production report may be used as the basis for allocating products costs between finished goods and ending WIP. The report can also be used to control costs by holding each department head responsible for the units entering production and the costs incurred in the department. Any differences in unit product costs from one month to another such as those in part 3 can be studied carefully and any siginificant differences investigated.

Dover Chemical Company Filling Department Computation of Equivalent unit (FIFO) Particulars Physical units Material Conversion Units to be accounted for: Beginning WIP Inventory 4400 Units started this period (25700+2600-2300) 56800 Total unit to be accounted for 61200 Units Accounted for: Units completed and transferred out From beginning inventory
Material - 0%
Conversion - 40% 4400 0 1760 Started and completed currently 51900 51900 51900 Transferred to finished goods 56300 51900 53660 Units in ending WIP
Material - 100%
Conversion - 30% 4900 4900 1470 Total units accounted for 61200 56800 55130

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