Question

Cost of Production Report

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., 7,000 units, 1/5 completed					17,780
	31	Direct materials, 315,000 units	787,500				805,280
	31	Direct labor	152,700				957,980
	31	Factory overhead	38,220				996,200
	31	Goods transferred, 316,000 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 $16,800 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	Increase	$
Change in conversion cost per equivalent unit	Decrease	$

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			7000
Received from materials storeroom			315000
Total units accounted for by the Roasting Department			322000
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, July 1	7000	0	5600
Started and completed in July	309000	309000	309000
Transferred to Packing Department in July	316000	309000	314600
Inventory in process, July 31	6000	6000	3600
Total units to be assigned costs	322000	315000	318200
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for July in Roasting Department		787500	190920
Total equivalent units		315000	318200
Cost per equivalent unit		2.50	0.60
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, July 1			17780
Costs incurred in July			978420
Total costs accounted for by the Roasting Department			996200
Cost allocated to completed and partially completed units:
Inventory in process, July 1 balance			17780
To complete inventory in process, July 1	0	3360	3360
Cost of completed July 1 work in process			21140
Started and completed in July	772500	185400	957900
Transferred to Packing Department in July			979040
Inventory in process, July 31	15000	2160	17160
Total costs assigned by the Roasting Department			996200
2
	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Increase	0.10	=2.50-(16800/7000)
Change in conversion cost per equivalent unit	Decrease	0.10	=0.60-((17780-16800)/(7000*1/5))