In a chemical company, there are 3 departments, Distilling, Reaction, and Fillin
ID: 2472342 • Letter: I
Question
In a chemical company, there are 3 departments, Distilling, Reaction, and Filling. The balance for the WIP-Filling on Dec. 1, 2012 is as follows WIP-Filling (2500 units, 60% complete): Direct Materials (2500*$13.10) $32750 Conversion (2500*60%*$5.65) $41225 The following were charged to WIP-Filling during December: Direct Materials transferred from Reaction Department (42100 units at $13 a unit) $547300 Direct Labor $143200 Factory Overhead $79605 During December, 40900 units were completed. WIP-Filling on Dec. 31 was 3700 units 30% complete 1. Prepare a cost of production report for the Filling Dept. for Dec. 2. Journalize the entries for costs transferred from Reaction dept. to Filling and the cost transferred from Filling to Finished Goods 3. Determine the increase or decrease in the cost per equivalent unit from November to December for direct materials and conversion costs 4. Discuss the uses of the cost of production report and the results of part three HERE IS THE ANSWER FORMATExplanation / Answer
Chemical Company cost of production report for the Filling Dept For the month ended Dec 31,2016 Equivalent Units Units Whole Units Direct Material Conversion Units Charged to productions Inventory in Process , Dec 1 2500 Received from Reaction Department 42100 Total Units accounted for by the Filling Dept 44600 Units to be assigned Costs; Inventory in process Dec 1( 60% complete);(2500 x 40%) 2500 0 1000 Started and completed in Dec (40,900 - 2500) 38400 38400 38400 Transfered to Finished Goods in Dec 40900 38400 39400 Inventory in process Dec 31 (30% complete);3700 x 30% 3700 3700 1110 Total Units to be assigned costs 44600 42100 40510 Cost Costs Direct Material Conversion Total cost Costs per equivalent unit: Total costs for Dec in Filling Department (conversion = $143,200+ $79,605) $547,300 $222,805 Divide by Total equivalent units(calculated above) 42100 40510 Cost per equivalent unit $13 $5.5 Costs assigned to production Inventory in process, Dec 1 $41,225 Cost incurred in Dec($547,300 + $222,805) $770,105 Total costs accounted for by the Filling Department $811,330 Cost allocated to completed and partially completed units: Inventory in process, Dec 1 $41,225 To complete in Inventory in Process Dec 31 ($5.50 x 1000) $0 $5,500 $5,500 Cost of completed Dec 1 work in process $46,725 Started and completed in Dec (38400 units x cost per equivalent units) $499,200 $211,200 $710,400 Transferred to finished goods in Dec $757,125 Inventory in process, Dec 31 $48,100 $6,105 $54,205 Total costs assigned to the Filling Department $811,330 b. Journalize the entries for costs transferred from Reaction dept. to Filling and the cost transferred from Filling to Finished Goods Work in Process ------Filling Dept $547,300 Work in Process ------Reaction Dept $547,300 3. Determine the increase or decrease in the cost per equivalent unit from November to December for direct materials and conversion costs Direct Material ($13.10 -$13) $0.1 Decrease Conversion ($5.50 -5.65) $0.15 Increase 4 The cost of production report may be used for allocationg cost between work in process and finished goods .Cost per equivalent unit of materials decreased by $0.10 and the cost per equivalent unit of conversion cost increased by $0.15 . Management may wish to investigate the causes for the increase in conversion cost.