Cost of Production Report Hana Coffee Company roasts and packs coffee beans. The
ID: 2534558 • Letter: C
Question
Cost of Production Report
Hana Coffee Company roasts and packs coffee beans. The process begins by placing coffee beans into the Roasting Department. From the Roasting Department, coffee beans are then transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at July 31:
Required:
1. Prepare a cost of production report, and identify the missing amounts for Work in Process—Roasting Department. If an amount is zero, enter "0". When computing cost per equivalent units, round to two decimal places.
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1. Calculate equivalent units for materials and conversion costs. Calculate the cost per equivalent unit for materials and conversion costs. Calculate the costs assigned to the beginning inventory, the units started and completed, and the ending inventory.
2. Assuming that the July 1 work in process inventory includes $17,920 of direct materials, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between February and July. If required, round your answers to the nearest cent.
ACCOUNT Work in Process—Roasting Department ACCOUNT NO. Date Item Debit Credit Balance Debit Credit July 1 Bal., 6,400 units, 2/5 completed 19,968 31 Direct materials, 288,000 units 835,200 855,168 31 Direct labor 161,000 1,016,168 31 Factory overhead 40,264 1,056,432 31 Goods transferred, 289,000 units ? 31 Bal., ? units, 1/5 completed ?Explanation / Answer
Solution 1:
Solution 2:
Cost per equivalant unit of material in opening WIP = $17,920 / 6400 = $2.80
Cost per equivalant unit of material during current period = $2.90
Change in direct materials cost per equivalent unit = $2.90 - $2.80 = $0.10 Increase
Cost per equivalant unit of conversion in opening WIP = ($19,968 - $17,920) / (6400*2/5) = $0.80
Cost per equivalant unit of material during current period = $0.70
Change in direct materials cost per equivalent unit = $0.70 - $0.80 = $0.10 Decrease
Hana Coffee Roasting Department Computation of Equivalent unit (FIFO) Particulars Physical units Material Conversion Units to be accounted for: Beginning WIP Inventory 6400 Units started this period 288000 Total unit to be accounted for 294400 Units Accounted for: Units completed and transferred out From beginning inventoryMaterial - 0%
Conversion - 3/5 6400 0 3840 Started and completed currently 282600 282600 282600 Units in ending WIP
Material - 100%
Conversion - 1/5 5400 5400 1080 Total units accounted for 294400 288000 287520