Question

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., 5,400 units, 2/5 completed					10,476
	31	Direct materials, 243,000 units	437,400				447,876
	31	Direct labor	97,600				545,476
	31	Factory overhead	24,440				569,916
	31	Goods transferred, 243,000 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 $9,180 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		$

Answer 1

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			5400
Received from materials storeroom			243000
Total units accounted for by the Roasting Department			248400
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, July 1	5400	0	3240
Started and completed in July	237600	237600	237600
Transferred to Packing Department in July	243000	237600	240840
Inventory in process, July 31	5400	5400	3240
Total units to be assigned costs	248400	243000	244080
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for July in Roasting Department		437400	122040
Total equivalent units		243000	244080
Cost per equivalent unit		1.80	0.50
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, July 1			10476
Costs incurred in July			559440
Total costs accounted for by the Roasting Department			569916
Cost allocated to completed and partially completed units:
Inventory in process, July 1 balance			10476
To complete inventory in process, July 1	0	1620	1620
Cost of completed July 1 work in process			12096
Started and completed in July	427680	118800	546480
Transferred to Molding Department in July			558576
Inventory in process, July 31	9720	1620	11340
Total costs assigned by the Roasting Department			569916
2
	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Increase	0.10		=1.8-(9180/5400)
Change in conversion cost per equivalent unit	Decrease	0.10		=0.5-((10476-9180)/(5400*2/5))