Question

Cost of Production Report

The Cutting Department of Karachi Carpet Company provides the following data for January. Assume that all materials are added at the beginning of the process.

Work in process, January 1, 13,600 units, 60% completed		$155,856*
*Direct materials (13,600 × $8.4)	$114,240
Conversion (13,600 × 60% × $5.1)	41,616
	$155,856
Materials added during January from Weaving Department, 209,600 units		$1,781,600
Direct labor for January		469,980
Factory overhead for January		574,420
Goods finished during January (includes goods in process, January 1), 212,000 units		—
Work in process, January 31, 11,200 units, 45% completed		—

a. Prepare a cost of production report for the Cutting Department. If an amount is zero or a blank, enter in "0". For the cost per equivalent unit computations, round your answers to two decimal places.

Karachi Carpet Company
Cost of Production Report-Cutting Department
For the Month Ended January 31
Unit Information
Units charged to production:
Inventory in process, January 1
Received from Weaving Department
Total units accounted for by the Cutting Department
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, January 1
Started and completed in January
Transferred to finished goods in January
Inventory in process, January 31
Total units to be assigned costs
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for January in Cutting Department		$	$
Total equivalent units
Cost per equivalent unit		$	$
Costs assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, January 1			$
Costs incurred in January
Total costs accounted for by the Cutting Department			$
Cost allocated to completed and partially completed units:
Inventory in process, January 1 balance			$
To complete inventory in process, January 1		$
Cost of completed January 1 work in process			$
Started and completed in January	$
Transferred to finished goods in January			$
Inventory in process, January 31
Total costs assigned by the Cutting Department			$

b. Compute and evaluate the change in the costs per equivalent unit for direct materials and conversion from the previous month (December). If required, round your answers to two decimal places.

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

Answer 1

Karachi Carpet Compan
Cost of Production Report-Cutting Department
For the Month Ended January 31
Unit Information
Units charged to production:
Inventory in process, January 1			13600
Received from Weaving Department			209600
Total units accounted for by the Cutting Department			223200
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, January 1	13600	0	5440
Started and completed in January	198400	198400	198400
Transferred to finished goods in January	212000	198400	203840
Inventory in process, January 31	11200	11200	5040
Total units to be assigned costs	223200	209600	208880
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for January in Cutting Department		1781600	1044400
Total equivalent units		209600	208880
Cost per equivalent unit		8.50	5.00
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, January 1			155856
Costs incurred in January			2826000
Total costs accounted for by the Cutting Department			2981856
Cost allocated to completed and partially completed units:
Inventory in process, January 1 balance			155856
To complete inventory in process, January 1	0	27200	27200
Cost of completed January 1 work in process			183056
Started and completed in January	1686400	992000	2678400
Transferred to finished goods in January			2861456
Inventory in process, January 31	95200	25200	120400
Total costs assigned by the Cutting Department			2981856
2
	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Increase	0.10	=8.5-8.4
Change in conversion cost per equivalent unit	Decrease	0.10	=5.1-5