Question

Cost of Production Report

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

Work in process, January 1, 10,600 units, 75% completed		$100,965*
*Direct materials (10,600 × $7.2)	$76,320
Conversion (10,600 × 75% × $3.1)	24,645
	$100,965
Materials added during January from Weaving Department, 163,200 units		$1,199,520
Direct labor for January		229,536
Factory overhead for January		280,544
Goods finished during January (includes goods in process, January 1), 165,200 units		—
Work in process, January 31, 8,600 units, 25% 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.

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

Feedback

b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (December). 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

Ques 1

KARACHI CARPET COMPANY
Cost of Production Report—Cutting Department For the Month Ended January 31, 2016
		Equivalent Units
	Whole Units
UNITS		Direct
		Materials	Conversion
Units charged to production:
Inventory in process, January 1	10,600
Received from Weaving Department	163,200
Total units accounted for by the
Cutting Department	173,800
Units to be assigned cost:
Inventory in process, January 1
(75% completed)	10,600	0	2650
Started and completed in January	154,600	154,600	154,600
Transferred to finished goods in
January	165,200	154,600	157,250
Inventory in process, January 31
(25% completed)	8,600	8,600	2150
Total units to be assigned cost	173,800	163,200	159,400

	Costs
COSTS	Direct Materials
		Conversion	Total
Costs per equivalent unit:
Total costs for January in Cutting
Department	$1,199,520	$510,080
Total equivalent units	163,200	159,400
Cost per equivalent unit	$7.35	$3.20
Costs assigned to production:
Inventory in process, January 1			$100,965
Costs incurred in January			1,709,600
Total costs accounted for by the
Cutting Department			$1,810,565
Cost allocated to completed and
partially completed units:
Inventory in process, January 1 balance			$100,965
To complete inventory in process,
Jan-01		$8,480	8,480
Cost of completed January 1 work in			$109,445
process
Started and completed in January	$1,136,310.00	$494,720.00	1,631,030
Transferred to finished goods in
January			$1,740,475
Inventory in process, January 31	$63,210.00	$6,880.00	70,090
Total costs assigned by the Cutting
Department			$1,810,565

Ques 2

Materials:	From current period	$       7.35
From beginning inventory		$       7.20
Increase		$       0.15
Conversion:	From current period	$       3.20
From beginning inventory		$       3.10
Increase		$       0.10
The cost per equivalent unit of materials increased by $0.15 per unit, and the cost per equivalent unit of conversion cost increased by $0.10 per unit. Management may wish to investigate the causes for these changes in cost.