Question

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		$

Answer 1

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