The debits to Work in Process%u2014Roasting Department for St. Arbucks Coffee Co

Question

The debits to Work in Process%u2014Roasting Department for St. Arbucks Coffee Company for July 2012, together with information concerning production, are as follows:

All direct materials are placed in process at the beginning of production. Prepare a cost of production report, presenting the following computations:

a.Direct materials and conversion equivalent units of production for July.

b.Direct materials and conversion costs per equivalent unit for July.

c.Cost of goods finished during July.

d.Cost of work in process at July 31, 2012.

e.Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (June). If required, round your answers to two decimal places.

Increase or Decrease Amount

Change in direct materials cost per equivalent unit: $

Change in conversion cost per equivalent unit: $

The debits to Work in Process%u2014Roasting Department for St. Arbucks Coffee Company for July 2012, together with information concerning production, are as follows: All direct materials are placed in process at the beginning of production. Prepare a cost of production report, presenting the following computations: Direct materials and conversion equivalent units of production for July. Direct materials and conversion costs per equivalent unit for July. Cost of goods finished during July. Cost of work in process at July 31, 2012. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (June). If required, round your answers to two decimal places. Increase or Decrease Amount Change in direct materials cost per equivalent unit: $ Change in conversion cost per equivalent unit: $

Explanation / Answer

St. Arbucks Coffee Company Cost of Production Report - Roasting Department For the Month Ended July 31, 2012 Units Equivalent Units Direct Materials (a)   Conversion Costs (a) Units - Units charged to production: Work in process inventory, July 1                     600    Received from materials storeroom                23,000    Total units accounted for                23,600 Units to be assigned costs: Work in process inventory, July 1 (20% completed)                     600                       -                       480 DM = 600%x 0% remaining to complete; CC = 600 x 80% remaining to complete Started and completed in July                22,000                22,000                22,000 DM = 22,000 x 100% completed; CC = 22,000 x 100% completed    Transferred to Packaging Department                22,600                22,000                22,480 Work in process inventory, July 31                  1,000                  1,000                     420 DM = 1,000 x 100% completed; CC = 1,000 x 42% completed Total units to be assigned costs                23,600                23,000                22,900 Costs - Direct Materials Conversion Costs Total Costs Cost per equivalent unit: Total July costs of Roasting Department                82,800                27,480    Total equivalent units (from a)                23,000                22,900    Cost per equivalent unit (b) $                3.60 $                1.20 Costs assigned to production: Work in process inventory, July 1                  2,418 given    Costs incurred in July              110,280 Calculation: DM $82,800 + CC $22,900    Total costs accounted for by Roasting Department                       -   $           112,698 Costs allocated to completed and partially completed units:    Work in process inventory, July 1 $              2,418 given    To complete work in process, July 1                       -                       576                     576 DM = 0 EU x $3.60; CC = 480 EU x $1.20    Cost to completed July 1 work in process                  2,994    Started and completed in July                79,200                26,400              105,600 DM = 22,000 EU x $3.60; CC = 22,000 EU x $1.20    Transferred to finished goods (c)              108,594    Work in process inventory, July 31 (d)                  3,600                     504                  4,104 DM = 1,000 EU x $3.60; CC = 420 EU x $1.20 Total Costs assigned by Roasting Department $           112,698 a.Direct materials and conversion equivalent units of production for July. DM - 23,000 EU; CC - 22,900 EU b.Direct materials and conversion costs per equivalent unit for July. DM = $3.60 per EU; CC - $1.20 per EU c.Cost of goods finished during July. $           108,594 d.Cost of work in process at July 31, 2012. $              4,104 e.Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (June). If required, round your answers to two decimal places. From current period $                3.60 From beginning inventory $                3.80 Decrease in Direct Materials cost per EU $               (0.20) From current period $                1.20 From beginning inventory $                1.15 Increase in conversion cost per EU $                0.05 Answer: Direct materials cost per equivalent unit decreased by $0.20 which is good. However, conversion costs per equivalent unit increased by $0.05 which is not good - this increase in conversion cost should be investigated in order to find out what caused this.

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