Question

Hearty Soup Co. uses a process cost system to record the costs of processing soup, which requires the cooking and filling processes. Materials are entered from the cooking process at the beginning of the filling process. The inventory of Work in Process-Filling on April 1 and debits to the account during April were as follows:

Bal., 700 units, 30% completed:
Direct materials (700 × $4.60)	$3,220
Conversion (700 × 30% × $1.75)	368
	$3,588
From Cooking Department, 7,400 units	$34,780
Direct labor	8,512
Factory overhead	2,464

During April, 700 units in process on April 1 were completed, and of the 7,400 units entering the department, all were completed except 500 units that were 90% completed.

Charges to Work in Process-Filling for May were as follows:

From Cooking Department, 9,500 units	$46,550
Direct labor	12,030
Factory overhead	2,834

During May, the units in process at the beginning of the month were completed, and of the 9,500 units entering the department, all were completed except 400 units that were 35% completed.

	Required:
1.	(a) Enter the balance as of April 1 in a four-column account for Work in Process-Filling. Record the debits and credits in the account for April. (b) Construct a cost of production report and present computations for determining i. equivalent units of production for materials and conversion. ii. cost per equivalent unit.* iii. cost of goods finished, differentiating between units started in the prior period and units started and finished in April.* iv. work in process inventory.* *If an amount is zero, enter "0". Round your cost per unit answers to the nearest cent and final answers to the nearest dollar amount.
2.	(a) Provide the same information for May by recording the May transactions in the four-column work in process account. (b) Construct a cost of production report and present the May computations (i through iv) listed in part 1(b).
3.	Comment on the change in costs per equivalent unit for March through May for direct materials and conversion costs.

Answer 1

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Hearty Soup
Workings
Goods finished in April
Inventory in Process April 1	700.00
Add: Received from Cooking Department	7,400.00
Less: Inventory in Process April 30	500.00
Goods finished in April	7,600.00
Started and completed in April
Goods finished in April	7,600.00
Less: Opening work in process	700.00
Started and completed in April	6,900.00

For April 30	Whole Units	Equivalent Units
		Materials	Conversion
Units charged to production
Inventory in Process April 1	700.00
Received from Cooking Dept.	7,400.00
Total units accounted for by the Filling Dept.	8,100.00
Units to be assigned costs:
Inventory in Process April 1	700.00	-	490.00
Started and completed in April	6,900.00	6,900.00	6,900.00		This is Whole units* % pending to complete. Material is 100% complete so 0. Conversion is 30% complete, so 70% completed this month.
Goods finished	7,600.00	6,900.00	7,390.00
Inventory in Process April 30	500.00	500.00	450.00		This is Whole units* % pending to complete. Material is 100% complete. Conversion is 90% complete.
Total units to be assigned costs:	8,100.00	7,400.00	7,840.00
Costs per equivalent unit		Materials	Conversion	Total
Total costs for the April in Filling Dept.		34,780.00	10,976.00	45,756.00	Conversion cost is $ 8,512 for Labor + $ 2,464 for Factory Overhead.
Total equivalent units		7,400.00	7,840.00
Costs per equivalent unit		4.70	1.400
Costs charged to production
Inventory in Process April 1				3,588.00
Costs incurred in April				45,756.00
Total costs accounted for by Filling Dept.				49,344.00
Costs allocated to completed and partially completed units
Inventory in Process April 1				3,588.00
To complete Inventory in Process April 1		-	686.00	686.00
Started and completed in April		32,430.00	9,660.00	42,090.00
Transferred to Finished goods in April				46,364.00
Inventory in Process April 30		2,350.00	630.00	2,980.00
Total costs assigned by Filling Dept.				49,344.00

Four column Work in Process- Filling Department					Balance
Date	Item	Post Ref.	Debit $	Credit $	Debit $	Credit $
April 1.	Bal., 700 units, 30% completed		3,588.00		3,588.00
April 30.	Cooking Dept., 7,400 units at $ 6.30		34,780.00		38,368.00
April 30.	Direct Labor		8,512.00		46,880.00
April 30.	Factory Overhead		2,464.00		49,344.00
April 30.	Finished Goods			46,364.00	2,980.00
April 30.	Bal., 1200 units, 90% completed				2,980.00

Workings
Goods finished in May
Inventory in Process May 1	500.00
Add: Received from Cooking Department	9,500.00
Less: Inventory in Process May 31	400.00
Goods finished in May	9,600.00
Started and completed in May
Goods finished in May	9,600.00
Less: Opening work in process	500.00
Started and completed in May	9,100.00

Cost of Production Report
For May 31	Whole Units	Equivalent Units
		Materials	Conversion
Units charged to production
Inventory in Process May 1	500.00
Received from Cooking Dept.	9,500.00
Total units accounted for by the Filling Dept.	10,000.00
Units to be assigned costs:
Inventory in Process May 1	500.00	-	50.00
Started and completed in May	9,100.00	9,100.00	9,100.00		This is Whole units* % pending to complete. Material is 100% complete so 0. Conversion is 90% complete, so 10% completed this month.
Goods finished	9,600.00	9,100.00	9,150.00
Inventory in Process May 31	400.00	400.00	140.00		This is Whole units* % pending to complete. Material is 100% complete. Conversion is 35% complete.
Total units to be assigned costs:	10,000.00	9,500.00	9,290.00
Costs per equivalent unit		Materials	Conversion	Total
Total costs for the May in Filling Dept.		46,550.00	14,864.00	61,414.00	Conversion cost is $ 12,030 for Labor + $ 2,834 for Factory Overhead.
Total equivalent units		9,500.00	9,290.00
Costs per equivalent unit		4.90	1.60
Costs charged to production
Inventory in Process May 1				2,980.00
Costs incurred in May				61,414.00
Total costs accounted for by Filling Dept.				64,394.00
Costs allocated to completed and partially completed units
Inventory in Process May 1				2,980.00
To complete Inventory in Process May 1		-	80.00	80.00
Started and completed in May		44,590.00	14,560.00	59,150.00
Transferred to Finished goods in May				62,210.00
Inventory in Process May 31		1,960.00	224.00	2,184.00
Total costs assigned by Filling Dept.				64,394.00

Four column Work in Process- Filling Department					Balance
Date	Item	Post Ref.	Debit $	Credit $	Debit $	Credit $
May 1.	Bal., 1200 units, 90% completed		2,980.00		2,980.00
May 31.	Cooking Dept., 10,800 units at $ 6.50		46,550.00		49,530.00
May 31.	Direct Labor		12,030.00		61,560.00
May 31.	Factory Overhead		2,834.00		64,394.00
May 31.	Finished Goods			62,210.00	2,184.00
May 31.	Bal., 400 units, 30% completed				2,184.00