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., 5,200 units, 1/5 completed					13,832
	31	Direct materials, 234,000 units	608,400				622,232
	31	Direct labor	131,000				753,232
	31	Factory overhead	32,800				786,032
	31	Goods transferred, 234,000 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 $13,000 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

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			5200
Received from materials storeroom			234000
Total units accounted for by the Roasting Department			239200
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, July 1	5200	0	4160
Started and completed in July	228800	228800	228800
Transferred to Packing Department in July	234000	228800	232960
Inventory in process, July 31	5200	5200	1040
Total units to be assigned costs	239200	234000	234000
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for July in Roasting Department		608400	163800
Total equivalent units		234000	234000
Cost per equivalent unit		2.60	0.70
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, July 1			13832
Costs incurred in July			772200
Total costs accounted for by the Roasting Department			786032
Cost allocated to completed and partially completed units:
Inventory in process, July 1 balance			13832
To complete inventory in process, July 1	0	2912	2912
Cost of completed July 1 work in process			16744
Started and completed in July	594880	160160	755040
Transferred to Packing Department in July			771784
Inventory in process, July 31	13520	728	14248
Total costs assigned by the Roasting Department			786032
2
	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Increase	0.10	=2.6-(13000/5200)
Change in conversion cost per equivalent unit	Decrease	0.10	=0.7-((13832-13000)/(5200*1/5))