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., 30,000 units, 10% completed					121,800
	31	Direct materials, 155,000 units	620,000				741,800
	31	Direct labor	90,000				831,800
	31	Factory overhead	33,272				865,072
	31	Goods transferred, 149,000 units			?
	31	Bal., ? units, 45% completed					?

Required:

1. Prepare a cost of production report given the format below, 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 the nearest cent.

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
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			$

2. Assuming that the July 1 work in process inventory includes $119,400 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 two decimal places.

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

Answer 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			30000
Received from materials storeroom			155000
Total units accounted for by the Roasting Department			185000
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, July 1	30000	0	27000
Started and completed in July	119000	119000	119000
Transferred to Packing Department in July	149000	119000	146000
Inventory in process, July 31	36000	36000	16200
Total units to be assigned costs	185000	155000	162200
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for July in Roasting Department		620000	123272
Total equivalent units		155000	162200
Cost per equivalent unit		4.00	0.76
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, July 1			121800
Costs incurred in July			743272
Total costs accounted for by the Roasting Department			865072
Cost allocated to completed and partially completed units:
Inventory in process, July 1 balance			121800
To complete inventory in process, July 1	0	20520	20520
Cost of completed July 1 work in process			142320
Started and completed in July	476000	90440	566440
Transferred to Packing Department in July			708760
Inventory in process, July 31	144000	12312	156312
Total costs assigned by the Roasting Department			865072
2
	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Increase	0.02	=4-(119400/30000)
Change in conversion cost per equivalent unit	Decrease	0.04	=0.76-((121800-119400)/3000)