Question

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, 400 pounds, 10% completed				$1,872*
	*Direct materials (400 X $4.5)	$1,800
	Conversion (400 X 10% X $1.8)	72
		$1,872
Coffee beans added during August, 13,000 pounds				57,850
Conversion costs during August				24,586
Work in process, August 31, 700 pounds, 40% completed				?
Goods finished during August, 12,700 pounds				?

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

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

Direct materials and conversion equivalent units of production for August.

Direct materials and conversion costs per equivalent unit for August.

Cost of goods finished during August.

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
Cost 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

Formula sheet

A1	B	C	D	E	F	G	H
2
3		Units To be accounted for:
4		WIP, Aug 1	1400
5		Started during the month	13000
6		Total units to be accounted	=SUM(D4:D5)
7		Units transferred out	=D6-D8	(Goods finished during august should be 13,700 pounds)
8		Ending WIP	700
9
10		In the FIFO method, the cost of beginning inventory is trasferred directly to the units transferred out and
11		costs added during the period is distributed first to cost of units transferred out and rest to ending work in process.
12
13		Units to be assigned costs:
14		Units	Total	Direct Materials	Conversion Cost
15		Inventory in process (10% completed)	=D4	0	=D15*(1-10%)
16		Units Started and completed during the month	=D7-D15	=D16	=E16
17		Transferred out	27500	=E15+E16	=F15+F16
18		Equivalent units of ending WIP (40% complete for conversion)	=D8	=D18	=D18*40%
19		Total Equivalent units		=E17+E18	=F17+F18
20
21
22		Cost per equivalent units	Direct Materials	Conversion Cost
23		Total cost incurred during the month	57850	24586
24		Total equivalent units	=E19	=F19
25		Cost per equivalent units	=D23/D24	=E23/E24
26
27		Cost assigned to production	Direct Materials	Conversion Cost	Total Cost
28		Inventory in process			1872
29		Cost during July			=D23+E23
30		Total cost to be accounted for by Roasting Department			=SUM(F28:F29)
31
32		Cost allocated to completed and partially completed units
33			Direct Materials	Conversion Cost	Total Cost
34		Inventory in process August 1			=F28
35		Cost to complete work in process on August 1		=F15*E25	=E35
36		Cost of completed August 1 work in process			=F34+F35
37		Started and completed during August	=E16*D25	=F16*E25	=D37+E37
38		Transferred to finished product in August			=F37+F36
39		Inventory in process August 31	=E18*D25	=F18*E25	=D39+E39
40		Total Cost assigned by Roasting Department			=F38+F39
41		b)
42		Cost per equivalent units	July	August	Increase/Decrease	Amount
43		Direct Material	4.5	=D25	Decrease	=E43-D43
44		Conversion costs	1.8	=E25	Decrease	=E44-D44
45