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, 1,200 pounds, 10% completed $6,492* *Direct materials (1,200 X $5.2) $6,240 Conversion (1,200 X 10% X $2.1) $252 $6,492 Coffee beans added during August, 38,000 pounds 195,700 Conversion costs during August 84,656 Work in process, August 31, 2,000 pounds, 70% completed ? Goods finished during August, 37,200 pounds ? All direct materials are placed in process at the beginning of production. a. Prepare a cost of production report, presenting the following computations: Direct materials and conversion equivalent units of production for August. Direct materials and conversion costs per equivalent unit for August. Cost of goods finished during August. Cost of work in process at 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

Part 1 - Solution

Morning brew Coffee

Cost of production Report - Roasting Department

For the Month Ended August 31

Unit Information

A) Units Charged To Production

Particulars of Units Charged to Production	Units
Beginning Inventory on August 1	1200
Add : Beans added during august	38000
Total Units accounted by Roasting Department	39200

B) Units to be assigned cost

Direct Material are placed in process at the beginning of production

Equivalent Units	Whole Units	Direct Material	Conversion
Beginning Work in Process Inventory (90% completed during august for conversion) (A)	1200		1080 (1200 * 90%)
Started and completed in August (B) Pounds completed total = 37200 out of which pounds of opening work in process completed hence during august 36000 (37200 - 1200) new pounds have been started and completed	36000	36000	36000
Transferred to Finished goods in august (A + B)	37200	36000	37080
Ending Work In process Inventory	2000	2000 (100% complete)	1400 (2000*70% complete)
Total units to be assigned costs	39200	38000	38480

Cost Information

A) Cost Per Equivalent Unit

Particulars	Direct Material	Conversion
Total Cost of roasting department in august month	$195700	$84656
Total Equivalent Units	38000	38480
Cost per Equivalent Unit	$5.15	$2.2

B) Costs assigned to Production

Particulars	Direct Material	Conversion	Total
Inventory cost at beginning of august month	$6240	$252	$6492
Costs incurred during august Month	$195700	$84656	$280356
Total costs accounted by roasting department			$286848

C) Cost allocated to completed and Partially completed Units

Particulars	Direcr Material	Conversion	Total
Inventory cost at the beginning of august			$6492
Cost of opening Work in process inventory completed in august		$2376 (1080 units *$2.2)	$2376
Cost of completed work in process on august 1			$8868
Started and completed in august	$185400 (36000*$5.15)	$79200 (36000*$2.2)	$264600
Transferred to finished goods in august			$273468
Work in process cost on august 31	$10300 (2000 units * $5.15)	$3080 (1400 units * $2.2)	$13380
Total costs assigned by roasting department			$286848

Part 2 - Computation and evaluation of change in direct material and conversion cost per equivalent unit from previous month

Particulars	Analysis (Increase/Decrease)	Computation (Per unit Change)
Change in direct material cost per equivalent unit	Decrease	$0.05 Per unit ($5.15 - $5.2)
Change in conversion cost per equivalent unit	Increase	0.1 Per unit ($2.2 - $2.1)