90.2K

Verified Solution

Link Copied!

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
(5,700 units, 20% completed):
	Direct materials (5,700 x $15.3)	$87,210
	Conversion (5,700 x 20% x $10)	11,400
		$98,610

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

Direct materials transferred from Reaction
	Department: 73,500 units at $15.1 a unit	$1,109,850
Direct labor		389,680
Factory overhead		374,402

During January, 72,900 units of specialty chemicals werecompleted. Work in Process—Filling Department on January 31 was6,300 units, 50% 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. If an amount box does not requirean entry, leave it blank.

(1)
(2)

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		$
Change in conversion cost per equivalent unit		$

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   and  .The report can also be used to control costs by holding eachdepartment head responsible for the units entering production andthe costs incurred in the department. Any differences in unitproduct costs from one month to another, such as those in part (3),can be studied carefully and any significant differencesinvestigated.