Question

Work in Process Account Data for Two Months; Cost of Production Reports

Hearty Soup Co. uses a process cost system to record the costs of processing soup, which requires the cooking and filling processes. Materials are entered from the cooking process at the beginning of the filling process. The inventory of Work in Process—Filling on April 1 and debits to the account during April were as follows:

Bal., 1,200 units, 70% completed:
	Direct materials (1,200 x $4.30)	$ 5,160
	Conversion (1,200 x 70% x $1.80)	1,512
		$ 6,672
From Cooking Department, 29,160 units		$128,304
Direct labor		33,864
Factory overhead		18,234

During April, 1,200 units in process on April 1 were completed, and of the 29,160 units entering the department, all were completed except 3,500 units that were 40% completed. Charges to Work in Process—Filling for May were as follows:

From Cooking Department, 33,500 units	$154,100
Direct labor	44,620
Factory overhead	24,020

During May, the units in process at the beginning of the month were completed, and of the 33,500 units entering the department, all were completed except 1,600 units that were 20% completed.

Required:

1. Enter the balance as of April 1 in a four-column account for Work in Process—Filling. Record the debits and credits in the account for April. Construct a cost of production report and present computations for determining (a) equivalent units of production for materials and conversion; (b) cost per equivalent unit; (c) cost of goods finished, differentiating between units started in the prior period and units started and finished in April; and (d) work in process inventory. If an amount box does not require an entry, leave it blank.

2. Provide the same information for May by recording the May transactions in the four-column work in process account. Construct a cost of production report and present the May computations (a through d) listed in part (1). If an amount box does not require an entry, leave it blank.

Answer 1

1.

Prepare the required ledger account and the production cost report as follows:

Work in process - Filing
Date	Accounts title & Explanation	#Ref	Debit	Credit
1-Apr	Balance		$6672
	Work in process - cooking		$128304
	wages payable		$33864
	Factory overhead		$18234
	Finished goods inventory			$169032
			$187074	$169032
30-Apr	Balance		$18042

Statement showing calculation of no. of units completed and transferred out
Units introduced during the period	29160
Add: Beginning WIP	1200
Total units available for production	30360
Less: No. of units in Ending WIP	3500
No. of units completed and transferred out	26860

Statement showing Calculation of equivalent units of production
	Materials	Conversion
Units completed and transferred out	26860	26860
Add: Units in Ending WIP	3500	3500
%age completion	100%	40%
Equivalent units in Ending WIP	3500	1400
Total equivalent units in production	30360	28260

Production cost report
	Material	Conversion	Total
Cost of beginning work in process	$5160	$1512	$6672
Costs added during the period:	$128304	$52098	$180402
Total cost to be accounted for:	$133464	$53610	$187074
Equivalent units	30360	28260
Cost per equivalent unit	$4.396	$1.897
Ending WIP	3500	3500
%age completion	100%	40%
Equivalent units in ending WIP	3500	1400
Cost in ending WIP (no. of equivalent units in ending WIP * cost per equivalent unit)	$15386	$2656	$18042
Units completed and transferred out	26860	26860
Cost of units completed and transferred out (units completed and transferred out * cost per equivalent unit)	$118078	$50954	$169032
Total cost accounted for:			$187074

2.

Prepare the required ledger account and production cost report as follows:

Work in process - Filing
Date	Accounts title & Explanation	#Ref	Debit	Credit
1-Apr	Balance		$18042
	Work in process - cooking		$154100
	wages payable		$44620
	Factory overhead		$24020
	Finished goods inventory			$232814
			$240782	$232814
30-Apr	Balance		$7968

Statement showing calculation of no. of units completed and transferred out
Units introduced during the period	33500
Add: Beginning WIP	3500
Total units available for production	37000
Less: No. of units in Ending WIP	1600
No. of units completed and transferred out	35400

Statement showing Calculation of equivalent units of production
	Materials	Conversion
Units completed and transferred out	35400	35400
Add: Units in Ending WIP	1600	1600
%age completion	100%	20%
Equivalent units in Ending WIP	1600	320
Total equivalent units in production	37000	35720

Production cost report
	Material	Conversion	Total
Cost of beginning work in process	$15386	$2656	$18042
Costs added during the period:	$154100	$68640	$222740
Total cost to be accounted for:	$169486	$71296	$240782
Equivalent units	37000	35720
Cost per equivalent unit	$4.5807	$1.996
Ending WIP	1600	1600
%age completion	100%	20%
Equivalent units in ending WIP	1600	320
Cost in ending WIP (no. of equivalent units in ending WIP * cost per equivalent unit)	$7330	$638	$7968
Units completed and transferred out	35400	35400
Cost of units completed and transferred out (units completed and transferred out * cost per equivalent unit)	$162156	$70658	$232814
Total cost accounted for:			$240782