Question

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, 800 pounds, 30% completed				$4,296*
	*Direct materials (800 X $4.8)	$3,840
	Conversion (800 X 30% X $1.9)	$456
		$4,296
Coffee beans added during August, 25,000 pounds				118,750
Conversion costs during August				50,080
Work in process, August 31, 1,300 pounds, 60% completed				?
Goods finished during August, 24,500 pounds				?

All direct materials are placed in the 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 on 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

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			800
Received from materials storeroom			25000
Total units accounted for by the Roasting department			25800
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials (1)	Conversion (1)
Inventory in process, August 1	800	0	(800*70%)= 560
Started and completed in August	(24500-800)= 23700	23700	23700
Transferred to finished goods in august	24500	23700	24260
Inventory in process, August 31	1300	1300	(1300*60%)= 780
Total units to be assigned costs	25800	25000	25040
Cost Information
Cost per equivalent unit:
		Direct materials	Conversion
Total costs for August in Roasting department		$118750	$50080
Total equivalent units		25000	25040
Cost per equivalent unit (2)		$4.75	$2.00
Cost assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, August 1			$4296
Costs incurred in August (118750+50080)			168830
Total costs accounted for by the Roasting department			$173126
Costs allocated to completed and partially completed units:
Inventory in process, August 1 balance			$4296
To complete inventory in process, August 1	$0	(560*$2.00)= 1120	1120
Cost of completed August 1 work in process			$5416
Started and completed in August	(23700*$4.75)= 112575	(23700*$2.00)= 47400	159975
Transferred to finished goods in August (3)			$165391
Inventory in process, August 31 (4)	(1300*$4.75)= 6175	(780*$2.00)= 1560	7735
Total costs assigned by the Roasting department			$173126

b)

	Increase/Decrease	Amount
Change in direct materials cost per equivalent unit	Decrease	($4.80-4.75)= $-0.05
Change in conversion cost per equivalent unit	Increase	($1.90-2.00)= $0.10