Question

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., 5,400 units, 2/5 completed 13,392 31 Direct materials, 243,000 units 558,900 572,292 31 Direct labor 116,600 688,892 31 Factory overhead 29,200 718,092 31 Goods transferred, 243,000 units ? 31 Bal., ? units, 2/5 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 5,400 Received from materials storeroom 243,000 Total units accounted for by the Roasting Department 248,400 Units to be assigned costs: Equivalent Units Whole Units Direct Materials Conversion Inventory in process, July 1 5,400 0 3,240 Started and completed in July 243,000 243,000 243,000 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 $ Feedback 1. Calculate equivalent units for materials and conversion costs. Calculate the cost per equivalent unit for materials and conversion costs. Calculate the costs assigned to the beginning inventory, the units started and completed, and the ending inventory. 2. Assuming that the July 1 work in process inventory includes $11,880 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 $ Change in conversion cost per equivalent unit $ Feedback 2. Compare the costs per equivalent unit for February and July. The costs per equivalent unit for materials and conversion for February are in the July 1 work in process inventory. The materials amount is given.

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			5400
Received from materials storeroom			243000
Total units accounted for by the Roasting Department			248400
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, July 1	5400	0	3240
Started and completed in July	237600	237600	237600
Transferred to Packing Department in July	243000	237600	240840
Inventory in process, July 31	5400	5400	2160
Total units to be assigned costs	248400	243000	243000
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for July in Roasting Department		558900	145800
Total equivalent units		243000	243000
Cost per equivalent unit		2.3	0.6
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, July 1			13392
Costs incurred in July			704700
Total costs accounted for by the Roasting Department			718092
Cost allocated to completed and partially completed units:
Inventory in process, July 1 balance			13392
To complete inventory in process, July 1	0	1944	1944
Cost of completed July 1 work in process			15336
Started and completed in July	546480	142560	689040
Transferred to Molding Department in July			704376
Inventory in process, July 31	12420	1296	13716
Total costs assigned by the Roasting Department			718092
2
	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Increase	0.1	=2.3-(11880/5400)
Change in conversion cost per equivalent unit	Decrease	0.1	=0.6-((13392-11880)/(5400*2/5))