White Diamond Flour Company manufactures flour by a series ofthree processes, beginning with wheat grain being introduced in theMilling Department. From the Milling Department, the materials passthrough the Sifting and Packaging departments, emerging as packagedrefined flour.

The balance in the account Work in Process-Sifting Departmentwas as follows on July 1, 2016:

Work in Process-Sifting Department
(600 units, 3535 completed):
Direct materials (600 × $2.25)	$1,350
Conversion (600 × 3535 × $0.40)	144
	$1,494

The following costs were charged to Work in Process-SiftingDepartment during July:

Direct materials transferred from MillingDepartment:
15,400 units at $2.35 a unit	$36,190
Direct labor	4,420
Factory overhead	2,474

During July, 14,400 units of flour were completed. Work inProcess-Sifting Department on July 31 was 1,600 units, 4545completed.

	Required:
1.	Prepare a cost of production report for the Sifting Departmentfor July.
2.	Journalize the entries for costs transferred from Milling toSifting and the costs transferred from Sifting to Packaging. Referto the Chart of Accounts for correct wording of accounttitles.
3.	Determine the increase or decrease in the cost per equivalentunit from June to July for direct materials and conversioncosts.
4.	Discuss the uses of the cost of production report and theresults of part (3).

Chart of Accounts

CHART OF ACCOUNTS
White Diamond Flour Company
General Ledger
ASSETS 110 Cash 121 Accounts Receivable 125 Notes Receivable 126 Interest Receivable 131 Materials 141 Work in Process-Milling Department 142 Work in Process-Sifting Department 143 Work in Process-Packaging Department 151 Factory Overhead-Milling Department 152 Factory Overhead-Sifting Department 153 Factory Overhead-Packaging Department 161 Finished Goods 171 Supplies 172 Prepaid Insurance 173 Prepaid Expenses 181 Land 191 Factory 192 Accumulated Depreciation-Factory LIABILITIES 210 Accounts Payable 221 Utilities Payable 231 Notes Payable 236 Interest Payable 251 Wages Payable EQUITY 311 Common Stock 340 Retained Earnings 351 Dividends 390 Income Summary	REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 520 Wages Expense 531 Selling Expenses 532 Insurance Expense 533 Utilities Expense 534 Supplies Expense 540 Administrative Expenses 561 Depreciation Expense-Factory 590 Miscellaneous Expense 710 Interest Expense

Cost of Production Report

1. Prepare a cost of production report for the SiftingDepartment for July.

WHITE DIAMOND FLOUR COMPANY
Cost of Production Report-Sifting Department
For the Month Ended July 31, 2016
UNITS	Whole Units	Equivalent Units
		Direct Materials	Conversion
Units charged to production:
Inventory in process, July 1
Received from Milling Department
Total units accounted for by the Sifting Department
Units to be assigned costs:
Inventory in process, July 1 (3535 completed)
Started and completed in July
Transferred to Packaging Department in July
Inventory in process, July 31 (4545 completed)
Total units to be assigned costs

COSTS	Costs
	Direct Materials	Conversion	Total
Costs per equivalent unit:
Total costs for July in Sifting Department
Total equivalent units	÷	÷
Cost per equivalent unit
Costs assigned to production:
Inventory in process, July 1
Costs incurred in July
Total costs accounted for by the Sifting Department
Cost allocated to completed and
partially completed units:
Inventory in process, July 1 balance
To complete inventory in process, July 1
Cost of completed July 1 work in process
Started and completed in July
Transferred to Packaging Department in July
Inventory in process, July 31
Total costs assigned by the Sifting Department

Journal

2. Journalize the entries for costs transferred from Milling toSifting and the costs transferred from Sifting to Packaging. Referto the Chart of Accounts for correct wording of account titles.

PAGE 10

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4

Final Questions

3. Determine the increase or decrease in the cost per equivalentunit from June to July for direct materials and conversioncosts.

Direct materials:
Conversion:

4. The cost of production report may be used as the basis forallocating product costs between ________ and ________ . The reportcan also be used to control costs by holding each department headresponsible for the units entering production and the costsincurred in the department. Any differences in unit product costsfrom one month to another, such as those in part (3), can bestudied carefully and any significant differences investigated.