Question

Equivalent Units and Related Costs; Cost of Production Report; Entries Wilmington Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling departments, emerging as finished chemicals. The balance in the account Work in Process—Filling was as follows on December 1, 2016: Work in Process—Filling Department (3,800 units, 70% completed): Direct materials (3,800 x $16.3) $61,940 Conversion (3,800 x 70% x $10.6) 28,196 $90,136 The following costs were charged to Work in Process—Filling during December: Direct materials transferred from Reaction Department: 49,000 units at $16 a unit $784,000 Direct labor 262,380 Factory overhead 252,100 During December, 48,600 units of specialty chemicals were completed. Work in Process—Filling Department on December 31 was 4,200 units, 30% completed.

Required:

1. Prepare a cost of production report for the Filling Department for December. If an amount is zero, enter "0". If required, round your cost per equivalent unit answers to two decimal places.

Wilmington Chemical Company Cost of Production Report-Filling Department For the Month Ended December 31, 2016 Unit Information Units charged to production: Inventory in process, December 1 Received from Reaction Department Total units accounted for by the Filling 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 costs Cost Information Costs per equivalent unit: Direct Materials Conversion Total costs for December in Filling Department $ $ Total equivalent units Cost per equivalent unit $ $ Costs charged to production: Direct Materials Conversion Total Inventory in process, December 1 $ Costs incurred in December Total costs accounted for by the Filling Department $ Cost 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 Filling Department $

2. Journalize the entries for (1) costs transferred from Reaction to Filling and (2) the cost transferred from Filling to Finished Goods. (1) Work in Process-Filling Department Work in Process-Reaction Department (2) Finished Goods Work in Process-Filling Department

3. Determine the increase or decrease in the cost per equivalent unit from November to December for direct materials and conversion costs. If required, round your answers to two decimal places. Increase or Decrease Amount Change in direct materials cost per equivalent unit Decrease $ Change in conversion cost per equivalent unit Increase $

4. The cost of production report may be used as the basis for allocating product costs between Work in Process and Finished Goods . The report can also be used to control costs by holding each department head responsible for the units entering production and the costs incurred in the department. Any differences in unit product costs from one month to another, such as those in part (3), can be studied carefully and any significant differences investigated. Feedback

Answer 1

Solution 1:

Wilmington Chemical Company
Filling Department
Computation of Equivalent unit (FIFO)
Particulars	Physical units	Material	Conversion
Units to be accounted for:
Beginning WIP Inventory	3800
Units started this period	49000
Total unit to be accounted for	52800
Units Accounted for:
Units completed and transferred out
From beginning inventory Material - 0% Conversion - 30%	3800	0	1140
Started and completed currently	44800	44800	44800
Transferred to finished goods	48600	44800	45940
Units in ending WIP Material - 100% Conversion - 30%	4200	4200	1260
Total units accounted for	52800	49000	47200

Wilmington Chemical Company
Filling Department
Computation of Cost per Equivalent unit
Particulars	Total cost	Material	Conversion
Current period cost	$1,298,480.00	$784,000.00	$514,480.00
Equivalent units		49000	47200
Cost per equivalent unit		$16.00	$10.90

Wilmington Chemical Company
Filling Department
Producton cost report - FIFO
Particulars	Total cost	Material	Conversion
Cost Accounted for :
Cost assigned to unit transferred out:
Cost from beginning WIP Inventory	$90,136	$61,940	$28,196
Current cost added to complete beginning WIP:
Material	$0	$0
Conversion (1140 * $10.90)	$12,426		$12,426
Total Cost from beginning inventory	$102,562	$61,940	$40,622
Current cost of unit started and completed:
Material (44800*$16)	$716,800	$716,800
Conversion (44800*$10.90)	$488,320		$488,320
Total cost of unit started and completed	$1,205,120	$716,800	$488,320
Total cost of unit transferred out	$1,307,682	$778,740	$528,942
Cost assigned to ending WIP:
Material (4200*$16)	$67,200	$67,200
Conversion (1260*$10.90)	$13,734		$13,734
Total ending WIP inventory	$80,934	$67,200	$13,734
Total cost accounted for	$1,388,616	$845,940	$542,676

Solution 2:

Journal Entries - Wilmington Chemical Company
S. No.	Particulars	Debit	Credit
1	Work In Process - Filling Department Dr	$784,000.00
	To Work In Process - Reaction Department		$784,000.00
	(Being cost of goods completed in reaction transferred to Filling department)
2	Finished Goods Inventory Dr	$1,307,682.00
	To Work In Process - Filling Department		$1,307,682.00
	(Being completed units transferred to finished goods)

solution 3:

Change in direct material cost per equivalent unit from November to December = $16 - $16.30 = $0.30 decrease

Change in conversion cost per equivalent unit from November to December = $10.90 - $10.60 = $0.30 Increase

Solution 4:

The cost of production report may be used as the basis for allocating product costs between Work in Process and Finished Goods . The report can also be used to control costs by holding each department head responsible for the units entering production and the costs incurred in the department. Any differences in unit product costs from one month to another, such as those in part (3), can be studied carefully and any significant differences investigated