Question

Equivalent Units and Related Costs; Cost of Production Report; Entries

Dover Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling departments, emerging as finished chemicals.

The balance in the account Work in Process—Filling was as follows on January 1:

Work in Process—Filling Department
(4,400 units, 80% completed):
	Direct materials (4,400 x $12.3)	$54,120
	Conversion (4,400 x 80% x $8)	28,160
		$82,280

The following costs were charged to Work in Process—Filling during January:

Direct materials transferred from Reaction
	Department: 56,800 units at $12.1 a unit	$687,280
Direct labor		245,000
Factory overhead		235,396

During January, 56,300 units of specialty chemicals were completed. Work in Process—Filling Department on January 31 was 4,900 units, 90% completed.

Required:

1. Prepare a cost of production report for the Filling Department for January. If an amount is zero, enter "0". If required, round your cost per equivalent unit answers to two decimal places.

Dover Chemical Company
Cost of Production Report-Filling Department
For the Month Ended January 31
Unit Information
Units charged to production:
Inventory in process, January 1
Received from Reaction Department
Total units accounted for by the Filling 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 Filling Department		$	$
Total equivalent units
Cost per equivalent unit		$	$
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, January 1			$
Costs incurred in January
Total costs accounted for by the Filling 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 Filling Department			$

2. Journalize the entries for (1) costs transferred from Reaction to Filling and (2) the cost transferred from Filling to Finished Goods.

(1)
(2)

3. Determine the increase or decrease in the cost per equivalent unit from November to January for direct materials and conversion costs. 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		$

4. The cost of production report may be used as the basis for allocating product costs between (A or B)_______ and (A or B)_______ . The report can also be used to control costs by holding each department head responsible for the units entering production and the costs incurred in the department. Any differences in unit product costs from one month to another, such as those in part (3), can be studied carefully and any significant differences investigated.

A. Direct Materials

B. Work in Process

Answer 1

Answer 1.
Dover Chemical Company
Cost of Production Report - Filling Department
For the Month ended Jan 31
Particulars		Equivalent Units
	Physical Units	Materials	Conversion Costs
Units Information
Units Charged to Production
Work in process - Beginning	4,400
Started into production	56,800
Total units	61,200
Units accounted for
Goods Units Completed & transferred out:
From Beginning WIP	4,400	-	880
(0% materials, 20% conversion costs)
Started & Completed (56,300 - 4,400)	51,900	51,900	51,900
Work in process, Ending	4,900	4,900	4,410
(100% materials, 90% conversion costs)
Equivalent units accounted for	61,200	56,800	57,190
	Materials	Conversion Costs	Total
Total Cost to Account for:
WIP, Beginning	54,120	28,160	82,280
Cost added in current period	687,280	480,396	1,167,676
Total cost to be account for	741,400	508,556	1,249,956
Cost added in current period	687,280	480,396	1,167,676
Equivalent Units of work done in current Period	56,800	57,190
Cost per Equivalent Unit	12.10	8.40	20.50
Assignment of Costs:
Goods Units and Completed out (56,300 Units)
WIP, Beginning -4,400 Units	-	-	82,280
Cost added to Beg. WIP in Current period	-	7,392	7,392
		(880 Units X $8.40)
Total of Beginning Inventory	-	7,392	89,672
Started and completed - 23,400 Units	627,990	435,960	1,063,950
	(51,900 units X $12.10)	(51,900 Units X $8.40)
Total Cost of good units completed & transferred out	627,990	443,352	1,153,622
WIP, Ending - 4,900 Units	59,290	37,044	96,334
	(4,900 units X $12.10)	(4,410 Units X $8.40)
Total Cost accounted For	687,280	480,396	1,249,956

Answer 2.
Journal Entry
Date	Particulars	Dr. Amt.	Cr. Amt.
1	WIP - Filling	687,280.00
	WIP - Reaction		687,280.00
	(record the inventory transferred)
2	Finished Goods Inventory	1,153,622.00
	WIP- Filling		1,153,622.00
	(record the finsihed goods produced)

Answer 3.
Calculation of Cost per Unit - Jan 1
	Materials	Conversion Costs	Total
WIP - Jan 1, Cost	54,120	28,160	82,280
Equivalent No. of Unit - WIP - Jan 1	4,400	3,520
Cost pet Equivalent Unit	12.30	8.00	20.30
	Materials	Conversion Costs	Total
Cost per Equivalent Unit - Beginning Inventory	12.30	8.00	20.30
Cost per Equivalent Unit -Jan	12.10	8.40	20.50
Increase (Decrease) in Cost per Unit	(0.20)	0.40	0.20
Answer 4.
The cost of production report may be used as the basis for allocating product costs between (A or B) Work-in-Process and (A or B) Finished Goods. The report can also be used to control costs by holding each department head responsible for the units entering production and the costs incurred in the department. Any differences in unit product costs from one month to another, such as those in part (3), can be studied carefully and any significant differences investigated.