Equivalent Units and Related Costs; Cost of Production Report;Entries
Dover Chemical Company manufactures specialty chemicals by aseries of three processes, all materials being introduced in theDistilling Department. From the Distilling Department, thematerials pass through the Reaction and Filling departments,emerging as finished chemicals.
The balance in the account Work in Process—Filling was asfollows on January 1:
| Work in Process—Filling Department | |
| (2,800 units, 70% completed): | |
| Direct materials (2,800 x $12.8) | $35,840 |
| Conversion (2,800 x 70% x $8.3) | 16,268 |
| $52,108 |
The following costs were charged to Work in Process—Fillingduring January:
| Direct materials transferred from Reaction | |
| Department: 36,100 units at $12.6 a unit | $454,860 |
| Direct labor | 148,040 |
| Factory overhead | 142,235 |
During January, 35,800 units of specialty chemicals werecompleted. Work in Process—Filling Department on January 31 was3,100 units, 10% completed.
Required:
1. Prepare a cost of production report for theFilling Department for January. If an amount is zero, enter "0". Ifrequired, round your cost per equivalent unit answers to twodecimal 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 | |
| Received from Reaction Department | |
| Total units accounted for by the FillingDepartment | |
| Units to be assigned costs: |
| | Equivalent Units |
| Whole Units | Direct 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 Information |
| Cost per equivalent unit: |
| Direct Materials | Conversion |
| Total costs for January in Filling Department | $ | $ |
| Total equivalent units | | |
| Cost per equivalent unit | $ | $ |
| Costs assigned to production: |
| Direct Materials | Conversion | Total |
| Inventory in process, January 1 | | | $ |
| Costs incurred in January | | | |
| Total costs accounted for by the FillingDepartment | | | $ |
| Costs allocated to completed and partiallycompleted 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 | | | $ |
| Inventory in process, January 31 | | | |
| Total costs assigned by the Filling Department | | | $ |
2. Journalize the entries for (1) coststransferred from Reaction to Filling and (2) the cost transferredfrom Filling to Finished Goods.
| (1) | Work in Process-Filling Department | | |
| Work in Process-Reaction Department | | |
| (2) | Work in Process-Filling Department | | |
| Factory Overhead-Filling Department | | |
3. Determine the increase or decrease in thecost per equivalent unit from December to January for directmaterials and conversion costs. If required, round your answers totwo decimal places.
| Increase or Decrease | Amount |
| Change in direct materials cost per equivalent unit | Decrease | $ |
| Change in conversion cost per equivalent unit | Decrease | $ |
4. Discuss the uses of the cost of productionreport and the results of part (3).
The cost of production report may be used as the basis forallocating product costs between Work in Process andFinished Goods . The report can also be used to control costs byholding each department head responsible for the units enteringproduction and the costs incurred in the department. Anydifferences in unit product costs from one month to another, suchas those in part (3), can be studied carefully and any significantdifferences investigated.
