Business;Equivalent Units and Related Costs

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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
(5,200 units, 20% completed):
Direct materials (5,200 x $12.40) $64,480
Conversion (5,200 x 20% x $8.10) 8,424
$72,904
The following costs were charged to Work in Process—Filling during January:
Direct materials transferred from Reaction
Department: 67,100 units at $12.20 a unit $818,620
Direct labor 291,310
Factory overhead 279,890
During January, 66,500 units of specialty chemicals were completed. Work in Process—Filling Department on January
31 was 5,800 units, 30% completed.
Required:

  1. Prepare a cost of production report for the Filling Department for January. If an amount is zero, enter “0”. If
    required, round your cost per equivalent unit answers to two decimal places.
    Dover Chemical Company
    Cost of Production Report-Filling Department
    For the Month Ended January 31
    Unit Information
    Units charged to production:
    Inventory in process, January 1 5,200
    Received from Reaction Department 67,100
    Total units accounted for by the Filling Department 72,300
    Units to be assigned costs:
    Equivalent Units
    Whole
    Units
    Direct
    Materials Conversion
    Inventory in process, January 1
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    5,200 0 4,160
    Started and completed in January 61,300 61,300 61,300
    Transferred to finished goods in January 66,500 61,300 65,460
    Inventory in process, January 31 5,800 5,800 4,060
    Total units to be assigned costs 72,300 67,100 69,520
    Cost Information
    Costs per equivalent unit:
    Direct
    Materials Conversion
    Total costs for January in Filling Department
    $ $
    Total equivalent units
    Cost per equivalent unit
    $ $
    Costs charged to production:
    Direct
    Materials Conversion Total
    Inventory in process, January 1
    $
    Costs incurred in January
    Total costs accounted for by the Filling Department
    $
    Cost allocated to completed and partially completed units:
    Inventory in process, January 1 balance
    $
    To complete inventory in process, January 1
    $ $
    Cost of completed January 1 work in process
    $
    Started and completed in January
    Transferred to finished goods in January
    $
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    Inventory in process, January 31
    Total costs assigned by the Filling Department
    $
  2. Journalize the entries for (1) costs transferred from Reaction to Filling and (2) the costs transferred from Filling to
    Finished Goods.
    (1) Work in Process-Filling Department
    Work in Process-Reaction Department
    (2) Finished Goods
    Work in Process-Filling Department
  3. Determine the increase or decrease in the cost per equivalent unit from December to January for direct materials
    and conversion costs. If required, round your answers to two decimal places.
    Increase or Decrease Amount
    Change in direct materials cost per equivalent unit Decrease $
    Change in conversion cost per equivalent unit Decrease
  4. The cost of production report may be used as the basis for allocating product costs between Work in Process
    and Finished Goods . 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 significant differences investigated.

Sample Solution

ACED ESSAYS