Question

Arabica Highland 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., 5,100 units, 3/5 completed					14,382
	31	Direct materials, 204,000 units	510,000				524,382
	31	Direct labor	98,500				622,882
	31	Factory overhead	24,632				647,514
	31	Goods transferred, 205,000 units			?
	31	Bal., ? units, 4/5 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 The rate used to allocate costs between completed and partially completed production.cost per equivalent units, round to two decimal places.

Arabica Highland 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
Received from materials storeroom
Total units accounted for by the Roasting Department
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, July 1
Started and completed in July
Transferred to Packing Department in July
Inventory in process, July 31
Total units to be assigned costs
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for July in Roasting Department		$	$
Total equivalent units
Cost per equivalent unit		$	$
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, July 1			$
Costs incurred in July
Total costs accounted for by the Roasting Department			$
Cost 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 Packing Department in July			$
Inventory in process, July 31
Total costs assigned by the Roasting Department			$

Feedback

2. Assuming that the July 1 work in process inventory includes $12,240 of direct materials, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between June and July. If required, round your answers to the nearest cent.

	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Decrease Increase	$
Change in conversion cost per equivalent unit	Decrease Increase	$

Answer 1

Arabica Highland 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			5100
Received from materials storeroom			204000
Total units accounted for by the Roasting Department			209100
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, July 1	5100	0	2040
Started and completed in July	199900	199900	199900
Transferred to Packing Department in July	205000	199900	201940
Inventory in process, July 31	4100	4100	3280
Total units to be assigned costs	209100	204000	205220
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for July in Roasting Department		510000	123132
Total equivalent units		204000	205220
Cost per equivalent unit		2.50	0.60
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, July 1			14382
Costs incurred in July			633132
Total costs accounted for by the Roasting Department			647514
Cost allocated to completed and partially completed units:
Inventory in process, July 1 balance			14382
To complete inventory in process, July 1	0	1224	1224
Cost of completed July 1 work in process			15606
Started and completed in July	499750	119940	619690
Transferred to Packing Department in July			635296
Inventory in process, July 31	10250	1968	12218
Total costs assigned by the Roasting Department			647514
2
	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Increase	0.10	=2.5-(12240/5100)
Change in conversion cost per equivalent unit	Decrease	0.10	=0.6-((14382-12240)/(5100*3/5))