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
(5,500 units, 30% completed):
	Direct materials (5,500 x $12.3)	$67,650
	Conversion (5,500 x 30% x $8)	13,200
		$80,850

The following costs were charged to Work in Process—Fillingduring January:

Direct materials transferred from Reaction
	Department: 71,000 units at $12.1 a unit	$859,100
Direct labor		295,170
Factory overhead		283,586

During January, 70,400 units of specialty chemicals werecompleted. Work in Process—Filling Department on January 31 was6,100 units, 30% 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.

DoverChemical Company
Costof Production Report-Filling Department
Forthe Month Ended January 31
UnitInformation
Units charged toproduction:
Inventory in process, January1
Received from ReactionDepartment
Total units accounted for bythe Filling Department
Units to be assignedcosts:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, January1
Started and completed inJanuary
Transferred to finished goodsin January
Inventory in process, January31
Total units to be assignedcosts
CostInformation
Cost per equivalent unit:
		Direct Materials	Conversion
Total costs for January inFilling Department		$	$
Total equivalent units
Cost per equivalent unit		$	$
Costs assigned toproduction:
	Direct Materials	Conversion	Total
Inventory in process, January1			$
Costs incurred in January
Total costs accounted for bythe Filling Department			$
Costs allocated to completedand partially completed units:
Inventory in process, January 1balance			$
To complete inventory inprocess, January 1		$
Cost of completed January 1work in process			$
Started and completed inJanuary	$
Transferred to finished goodsin January			$
Inventory in process, January31
Total costs assigned by theFilling Department			$

Feedback

1. Calculate equivalent units for materials and conversioncosts. Calculate the cost per equivalent unit for materials andconversion costs. Calculate the costs assigned to the beginninginventory, the units started and completed, and the endinginventory.

2. Journalize the entries for (1) coststransferred from Reaction to Filling and (2) the cost transferredfrom Filling to Finished Goods.

(1)	Work in Process-FillingDepartment
	Work in Process-ReactionDepartment
(2)	Finished Goods
	Work in Process-FillingDepartment

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	Increase	$

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 Processand Finished Goods . The report can also be usedto control costs by holding each department head responsible forthe units entering production and the costs incurred in thedepartment. Any differences in unit product costs from one month toanother, such as those in part (3), can be studied carefully andany significant differences investigated.