Question

The Cutting Department of Tangu Carpet Company provides the following data for December 2016. Assume that all materials are added at the beginning of the process.

Work in process, December 1, 12,600 units, 75% completed		$127,575*
*Direct materials (12,600 × $7.2)	$90,720
Conversion (12,600 × 75% × $3.9)	36,855
	$127,575
Materials added during December from Weaving Department, 194,000 units		$1,406,500
Direct labor for December		342,702
Factory overhead for December		418,858
Goods finished during December (includes goods in process, December 1), 196,200 units		—
Work in process, December 31, 10,400 units, 35% completed		—

a. Prepare a cost of production report for the Cutting Department. If an amount is zero or a blank, enter in "0". For the cost per equivalent unit computations, round your answers to two decimal places.

Tangu Carpet Company
Cost of Production Report-Cutting Department
For the Month Ended December 31, 2016
Unit Information
Units charged to production:
Inventory in process, December 1
Received from Weaving Department
Total units accounted for by the Cutting Department
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, December 1
Started and completed in December
Transferred to finished goods in December
Inventory in process, December 31
Total units to be assigned cost
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for December in Cutting Department		$	$
Total equivalent units
Cost per equivalent unit		$	$
Costs assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, December 1			$
Costs incurred in December
Total costs accounted for by the Cutting Department			$
Costs allocated to completed and partially completed units:
Inventory in process, December 1 balance			$
To complete inventory in process, December 1		$
Cost of completed December 1 work in process			$
Started and completed in December	$
Transferred to finished goods in December			$
Inventory in process, December 31
Total costs assigned by the Cutting Department			$

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

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

Answer 1

Tangu Carpet Company
Cost of Production Report-Cutting Department
For the Month Ended December 31, 2016
Unit Information
Units charged to production:
Inventory in process, December 1	12,600.00
Received from Weaving Department	1,94,000.00
Total units accounted for by the Cutting Department	2,06,600.00
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, December 1 (75% completed)	12,600.00		3,150.00
Started and completed in December (/194000 -10400)	1,83,600.00	1,83,600.00	1,83,600.00
Transferred to finished goods in December	1,96,200.00	1,83,600.00	1,86,750.00
Inventory in process, December 31	10,400.00	10,400.00	3,640.00
Total units to be assigned cost	2,06,600.00	1,94,000.00	1,90,390.00
Cost Information
Costs per equivalent unit:
	Direct Materials	Conversion
Total costs for December in Cutting Department (conversion = 342702 +418858)	$ 14,06,500.00	$ 7,61,560.00
Total equivalent units	1,94,000.00	1,90,390.00
Cost per equivalent unit	$               7.25	$             4.00
Costs assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, December 1			$   1,27,575.00
Costs incurred in December			$ 21,68,060.00
Total costs accounted for by the Cutting Department			$ 22,95,635.00
Costs allocated to completed and partially completed units:
Inventory in process, December 1 balance			$   1,27,575.00
To complete inventory in process, December 1		$    12,600.00	$      12,600.00
Cost of completed December 1 work in process			$   1,40,175.00
Started and completed in December	$ 13,31,100.00	$ 7,34,400.00	$ 20,65,500.00
Transferred to finished goods in December			$ 22,05,675.00
Inventory in process, December 31	$      75,400.00	$    14,560.00	$      89,960.00
Total costs assigned by the Cutting Department			$ 22,95,635.00
b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (November). If required, round your answers to two decimal places.
	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit = $7.25 - $7.20	Increase	$             0.05
Change in conversion cost per equivalent unit = $4 - $3.90	Increase	$             0.10