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, 1,000 pounds, 60% completed				$4,960*
	*Direct materials (1,000 X $4)	$4,000
	Conversion (1,000 X 60% X $1.6)	$960
		$4,960
Coffee beans added during August, 31,000 pounds				122,450
Conversion costs during August				52,564
Work in process, August 31, 1,600 pounds, 70% completed				?
Goods finished during August, 30,400 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

Morning Brew Coffee Company
Production Cost Report
a) Input/Output reconciliation
Units be accounted for	Physical units
Units in beginning WIP Inventory	1,000
Units started/transferred in during the period	31,000
Total units be accounted for	32,000
Transferred out from Beginning Inventory	1,000
Units started and completed during the period	29,400
Units transferred out	30,400
Units in ending WIP Inventory	1,600
Total units accounted for	32,000
b) Cost of input
Particulars	Material	Conversion Cost	Total
Cost in beginning WIP Inventory	$           4,000.00	$                  960.00	$             4,960.00
Cost incurred during the period	$     1,22,450.00	$             52,564.00	$       1,75,014.00
Total	$     1,26,450.00	$            53,524.00	$       1,79,974.00
a) Equivalent units of Production- FIFO
	Material	Conversion Cost
Units in beginning WIP (A)	1000	1000
% of completion of beginning WIP in previous period (B)	100%	60%
% of beginning WIP completed this period [C=100%-B]	0%	40%
Equivalent units in beginning WIP [D=A×C]	-	400
Units both started and completed in current period (E)	29,400	29400
Units of ending WIP (F)	1,600	1600
Percentage of completion of ending WIP (G)	100%	70%
Equivalent units in ending WIP (H=F×G)	1,600	1,120
Total equivalent units (D+E+H)	31,000	30,920
b) Cost per Equivalent Unit of Production-FIFO
	Material	Conversion Cost	Total
Cost be accounted for (a)	$     1,22,450.00	$             52,564.00	$       1,75,014.00
Total Equivalent unit be accounted for (b)	31,000	30,920.0
Cost per Equivalent Unit (a/b)	$                  3.95	$                       1.70	$                    5.65
c) & d)Assignment of Cost to the Units transferred out & Units in ending WIP-FIFO
	Material	Conversion Cost	Total
Cost in beginning WIP Inventory (A)	$                4,000	$                        960	$                  4,960
Transferred in cost for opening WIP (B)= {Cost per Equivalent unit* Equivalent unit}	$                       -	$                        680	$                      680
Beginning Inventory ©=A+B	$                4,000	$                    1,640	$                  5,640
Cost assigned the units transferred out (D)= {Cost per Equivalent unit* Equivalent unit}	$          1,16,130	$                  49,980	$            1,66,110
Cost assigned the ending WIP Inventory (E)= {Cost per Equivalent unit* Equivalent unit}	$                6,320	$                    1,904	$                  8,224
Total Cost accounted for			$       1,79,974.00
Summery of Cost be accounted for and Accounted for as-FIFO
Cost be accounted for		Accounted for as
Cost in beginning WIP Inventory	$           4,960.00	Cost transferred Out
		Beginning	$                  5,640
Cost Added		Started & Completed	$             1,66,110
Material	$     1,22,450.00
Conversion Cost	$        52,564.00	Closing WIP	$                  8,224
Total	$     1,79,974.00	Total	$            1,79,974
Change in direct material cost per equivalent unit	Decrease by	$                     -0.05	($3.95-4.0)
Change in conversion cost per equivalent unit	Increase by	$                       0.20	($1.7-1.6)