Question

Cost of Production Report

The debits to Work in Process—Roasting Department for Morning Brew Coffee Company for August, together with information concerning production, are as follows:

Work in process, August 1, 900 pounds, 20% completed				$3,402*
	*Direct materials (900 X $3.5)	$3,150
	Conversion (900 X 20% X $1.4)	252
		$3,402
Coffee beans added during August, 28,000 pounds				96,600
Conversion costs during August				42,030
Work in process, August 31, 1,400 pounds, 50% completed				?
Goods finished during August, 27,500 pounds				?

All direct materials are placed in process at the beginning of production.

a. Prepare a cost of production report, presenting the following computations:

1. Direct materials and conversion equivalent units of production for August.
2. Direct materials and conversion costs per equivalent unit for August.
3. Cost of goods finished during August.
4. Cost of work in process at August 31.

If an amount is zero, enter in "0". For the cost per equivalent unit, round your answer to two decimal places.

Morning Brew Coffee Company
Cost of Production Report-Roasting Department
For the Month Ended August 31
Unit Information
Units charged to production:
Inventory in process, August 1
Received from materials storeroom
Total units accounted for by the Roasting Department
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials (1)	Conversion (1)
Inventory in process, August 1
Started and completed in August
Transferred to finished goods in August
Inventory in process, August 31
Total units to be assigned costs
Cost Information
Cost per equivalent unit:
		Direct Materials	Conversion
Total costs for August in Roasting Department		$	$
Total equivalent units
Cost per equivalent unit (2)		$	$
Costs assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, August 1			$
Costs incurred in August
Total costs accounted for by the Roasting Department			$
Costs allocated to completed and partially completed units:
Inventory in process, August 1 balance			$
To complete inventory in process, August 1	$	$
Cost of completed August 1 work in process			$
Started and completed in August
Transferred to finished goods in August (3)			$
Inventory in process, August 31 (4)
Total costs assigned by the Roasting Department			$

Feedback

a. How much more (percentage amount) needed to be done to the beginning work in process units to make the units to complete to transfer to the next department? Did these units require more material cost or more conversion cost? How much, in terms of cost, had been done to these units in the prior period? In order for units to be transferred to the next department, the units have to be complete with respect to both materials and conversion. When are materials added in the process? How complete are the units in ending inventory with respect to materials? How compete are the units in ending inventory with respect to conversion? Materials and conversion cost needs to be allocated among the equivalent units. Are the number of equivalent units the same for materials and conversion?

b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (July). If required, round your answers to the nearest cent.

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

Answer 1

Morning Brew Coffee Company
Cost of Production Report-Roasting Department
For the Month Ended August 31
Unit Information
Units charged to production:
Inventory in process, August 1			900
Received from materials storeroom			28000
Total units accounted for by the Roasting Department			28900
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, August 1	900	0	720
Started and completed in August	26600	26600	26600
Transferred to finished goods in August	27500	26600	27320
Inventory in process, August 31	1400	1400	700
Total units to be assigned costs	28900	28000	28020
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for August in Roasting Department		96600	42030
Total equivalent units		28000	28020
Cost per equivalent unit		3.45	1.50
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, August 1			3402
Costs incurred in August			138630
Total costs accounted for by the Roasting Department			142032
Cost allocated to completed and partially completed units:
Inventory in process, August 1 balance			3402
To complete inventory in process, August 1	0	1080	1080
Cost of completed August 1 work in process			4482
Started and completed in August	91770	39900	131670
Transferred to finished goods in August			136152
Inventory in process, August 31	4830	1050	5880
Total costs assigned by the Roasting Department			142032
2
	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Decrease	0.05	=3.5-3.45
Change in conversion cost per equivalent unit	Increase	0.10	=1.5-1.4