Question

20-3 20-16 Cost of Production Report

The debits to Work in Process—Roasting Department for Morning Brew Coffee Company for August, together with information concerning production, are as follows:

Work in process, August 1, 700 pounds, 60% completed				$3,220*
	*Direct materials (700 X $3.7)	$2,590
	Conversion (700 X 60% X $1.5)	$630
		$3,220
Coffee beans added during August, 22,000 pounds				80,300
Conversion costs during August				34,768
Work in process, August 31, 1,100 pounds, 50% completed				?
Goods finished during August, 21,600 pounds				?

All direct materials are placed in process at the beginning of production.

a. Prepare a cost of production report, presenting the following computations:

1. Direct materials and conversion equivalent units of production for August
2. Direct materials and conversion costs per equivalent unit for August
3. Cost of goods finished during August
4. Cost of work in process at August 31

If an amount is zero, enter in "0". For the cost per equivalent unit, round your answer to two decimal places.

Morning Brew Coffee Company
Cost of Production Report-Roasting Department
For the Month Ended August 31
Unit Information
Units charged to production:
Inventory in process, August 1
Received from materials storeroom
Total units accounted for by the Roasting Department
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials (1)	Conversion (1)
Inventory in process, August 1
Started and completed in August
Transferred to finished goods in August
Inventory in process, August 31
Total units to be assigned costs
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for August in Roasting Department		$	$
Total equivalent units
Cost per equivalent unit (2)		$	$
Costs assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, August 1			$
Costs incurred in August
Total costs accounted for by the Roasting Department			$
Costs allocated to completed and partially completed units:
Inventory in process, August 1 balance			$
To complete inventory in process, August 1	$	$
Cost of completed August 1 work in process			$
Started and completed in August
Transferred to finished goods in August (3)			$
Inventory in process, August 31 (4)
Total costs assigned by the Roasting Department			$

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

Answer :a

Morning Brew Coffee Company
Cost of Production Report-Roasting Department
For the Month Ended August 31
Unit Information
Units charged to production:
Inventory in process, August 1			700
Received from materials storeroom			22000
Total units accounted for by the Roasting Department			22700
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials (1)	Conversion (1)
Inventory in process, August 1	700		(700*40%) 280
Started and completed in August (22000 -1100)	20900	20900	20900
Transferred to finished goods in August	21600	20900	21180
Inventory in process, August 31	1100	1100	(1100*50%) 550
Total units to be assigned costs	22700	22000	21730
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for August in Roasting Department		$80300	$34768
Total equivalent units		22000	21730
Cost per equivalent unit (2)		$3.65	$1.60
Costs assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, August 1			$3220
Costs incurred in August			115068
Total costs accounted for by the Roasting Department			$118288
Costs allocated to completed and partially completed units:
Inventory in process, August 1 balance			$3220
To complete inventory in process, August 1	$0	$448(280*1.60)	448
Cost of completed August 1 work in process	0	448	$3668
Started and completed in August	(20900 * 3.65) 76285	(20900*1.60) 33440	109725
Transferred to finished goods in August (3)			$113,393
Inventory in process, August 31 (4)	(1100*3.65) 4015	(550*1.60) 880	4895
Total costs assigned by the Roasting Department			$118,288

Answer :b

	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Decrease	$0.05 (3.7-3.65)
Change in conversion cost per equivalent unit	Increase	$0.10 (1.5 - 1.60)

***If the answer does not match, it may be due to rounding off. Fee free to ask in case of any doubt.