Question

In: Accounting

Hana Coffee Company roasts and packs coffee beans. The process begins by placing coffee beans into...

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:

ACCOUNT Work in Process—Roasting Department ACCOUNT NO.
Date Item Debit Credit Balance
Debit Credit
July 1 Bal., 7,500 units, 2/5 completed 26,700
31 Direct materials, 337,500 units 1,113,750 1,140,450
31 Direct labor 217,100 1,357,550
31 Factory overhead 54,260 1,411,810
31 Goods transferred, 338,000 units ?
31 Bal., ? units, 3/5 completed ?

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.

Hana Coffee Company
Cost of Production Report-Roasting Department
For the Month Ended July 31
Unit Information
Units charged to production:
Inventory in process, July 1
Received from materials storeroom
Total units accounted for by the Roasting Department
Units to be assigned costs:
Equivalent Units
Whole Units Direct Materials Conversion
Inventory in process, July 1
Started and completed in July
Transferred to Packing Department in July
Inventory in process, July 31
Total units to be assigned costs
Cost Information
Cost per equivalent unit:
Direct Materials Conversion
Total costs for July in Roasting Department $ $
Total equivalent units
Cost per equivalent unit $ $
Costs assigned to production:
Direct Materials Conversion Total
Inventory in process, July 1 $
Costs incurred in July
Total costs accounted for by the Roasting Department $
Costs 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 Molding Department in July $
Inventory in process, July 31
Total costs assigned by the Roasting Department $

2. Assuming that the July 1 work in process inventory includes $24,000 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.

Increase or Decrease Amount
Change in direct materials cost per equivalent unit $
Change in conversion cost per equivalent unit $

Solutions

Expert Solution

Hana Coffee Company
Cost of Production Report-Roasting Department
For the Month Ended July 31
Unit Information
Units charged to production:
Inventory in process, July 1 7500
Received from materials storeroom 337500
Total units accounted for by the Roasting Department 345000
Units to be assigned costs:
Equivalent Units
Whole Units Direct Materials Conversion
Inventory in process, July 1 7500 4500
Started and completed in July (338000-7500) 330500 330500 330500
Transferred to Packing Department in July 338000 330500 335000
Inventory in process, July 31 7000 7000 4200
Total units to be assigned costs 345000 337500 339200
Cost Information
Cost per equivalent unit:
Direct Materials Conversion
Total costs for July in Roasting Department $11,13,750.00 $2,71,360.00
Total equivalent units 337500 339200
Cost per equivalent unit $3.30 $0.80
Costs assigned to production:
Direct Materials Conversion Total
Inventory in process, July 1 $26,700.00
Costs incurred in July $13,85,110.00
Total costs accounted for by the Roasting Department $14,11,810.00
Costs allocated to completed and partially completed units:
Inventory in process, July 1 balance $26,700.00
To complete inventory in process, July 1 $0.00 $3,600.00 $3,600.00
Cost of completed July 1 work in process $30,300.00
Started and completed in July $10,90,650.00 $2,64,400.00 $13,55,050.00
Transferred to Molding Department in July $13,85,350.00
Inventory in process, July 31 $23,100.00 $3,360.00 $26,460.00
Total costs assigned by the Roasting Department $14,11,810.00
Part-2
Cost per equivalant unit of material in opening WIP = $24000/ 7500 = $3.20
Cost per equivalant unit of material during current period = $3.30
Change in direct materials cost per equivalent unit = $3.30 - $3.20 = $0.10 Increase
Cost per equivalant unit of conversion in opening WIP = ($26700 - $24000) / (7500*2/5) =$0.9
Cost per equivalant unit of material during current period = $0.80
Change in direct materials cost per equivalent unit = $0.90 - $0.80 = $0.10 Decrease
Let me know if any doubt in solution, kindly mark positive rating it would help me lot.

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