Question

Cost of Production Report

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., 5,500 units, 3/5 completed					18,920
	31	Direct materials, 247,500 units	742,500				761,420
	31	Direct labor	157,200				918,620
	31	Factory overhead	39,360				957,980
	31	Goods transferred, 248,000 units			?
	31	Bal., ? units, 1/5 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 $15,950 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	Increase	$
Change in conversion cost per equivalent unit	Decrease	$

Answer 1

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			5500
Received from materials storeroom			247500
Total units accounted for by the Roasting Department			253000
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, July 1	5500	0	2200
Started and completed in July	242500	242500	242500
Transferred to Packing Department in July	248000	242500	244700
Inventory in process, July 31	5000	5000	1000
Total units to be assigned costs	253000	247500	245700
Cost Information
Cost per equivalent unit:
		Direct Materials	Conversion
Total costs for July in Roasting Department		742500	196560
Total equivalent units		247500	245700
Cost per equivalent unit		3.00	0.80
Costs assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, July 1			18920
Costs incurred in July	742500	196560	939060
Total costs accounted for by the Roasting Department			957980
Costs allocated to completed and partially completed units:
Inventory in process, July 1 balance			18920
To complete inventory in process, July 1 (2200 x $0.80)	0	1760	1760
Cost of completed July 1 work in process			20680
Started and completed in July	727500	194000	921500
Transferred to Packing Department in July			942180
Inventory in process, July 31	15000	800	15800
Total costs assigned by the Roasting Department			957980

2.

	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Increase	$                                0.10
Change in conversion cost per equivalent unit	Decrease	$                                0.10

Working:

	Direct Materials	Conversion
Cost per equivalent unit, July 1	$                               2.90	$                                0.90
	($15950/5500)	[($18920-15950)/3300
Cost per equivalent unit, July 31	$                               3.00	$                                0.80
(Increase)/Decrease	$                             -0.10	$                                0.10