Question

In: Accounting

Hana Coffee Company roasts and packs coffee beans. The process begins by placing coffee beans into...

Hana 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., 4,900 units, 4/5 completed 6,958
31 Direct materials, 220,500 units 264,600 271,558
31 Direct labor 52,900 324,458
31 Factory overhead 13,280 337,738
31 Goods transferred, 221,000 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 cost per equivalent units, round to two decimal places.

Hana 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
Cost per equivalent unit:
Direct Materials Conversion
Total costs for July in Roasting Department $ $
Total equivalent units
Cost per equivalent unit $ $
Costs assigned to production:
Direct Materials Conversion Total
Inventory in process, July 1 $
Costs incurred in July
Total costs accounted for by the Roasting Department $
Costs 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 Molding Department in July $
Inventory in process, July 31
Total costs assigned by the Roasting Department $

2. Assuming that the July 1 work in process inventory includes $5,390 of direct materials, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between February and 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 $

Solutions

Expert Solution

Solution 1:

Hana 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 4900
Received from materials storeroom 220500
Total units accounted for by the Roasting Department 225400
Units to be assigned costs:
Equivalent Units
Whole Units Direct Materials (1) Conversion (1)
Inventory in process, July 1 4900 0 980
Started and completed in August 216100 216100 216100
Transferred to finished goods in August 221000 216100 217080
Inventory in process, July 31 4400 4400 3520
Total units to be assigned costs 225400 220500 220600
Cost Information
Costs per equivalent unit:
Direct Materials Conversion
Total costs for July in Roasting Department $264,600.00 $66,180.00
Total equivalent units 220500 220600
Cost per equivalent unit (2) $1.20 $0.30
Costs assigned to production:
Direct Materials Conversion Total
Inventory in process, July 1 $6,958.00
Costs incurred in July $264,600.00 $66,180.00 $330,780.00
Total costs accounted for by the Roasting Department $337,738.00
Costs allocated to completed and partially completed units:
Inventory in process, July 1 balance $6,958.00
To complete inventory in process, July 1 $0.00 $294.00 $294.00
Cost of completed July 1 work in process $7,252.00
Started and completed in July $259,320.00 $64,830.00 $324,150.00
Transferred to finished goods in July (3) $331,402.00
Inventory in process, July 31 (4) $5,280.00 $1,056.00 $6,336.00
Total costs assigned by the Roasting Department $337,738.00

Solution 2:

Cost per equivalent unit in prior period - Direct material = $5,390 / 4900 = $1.10 per unit

Cost per equivalent unit in prior period - conversion= ($6,958 - $5,390) / (4900*4/5) = $0.40 per unit

Particulars Increase or Decrease Amount
Change in direct materials cost per equivalent unit ($1.20 - $1.10) Increase $0.10
Change in conversion cost per equivalent unit ($0.40 - $0.30) Decrease $0.10

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