Question

Arabica Highland 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., 5,300 units, 4/5 completed					18,232
	31	Direct materials, 212,000 units	614,800				633,032
	31	Direct labor	118,800				751,832
	31	Factory overhead	29,740				781,572
	31	Goods transferred, 213,000 units			?
	31	Bal., ? units, 4/5 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.

Arabica Highland 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
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for July in Roasting Department		$	$
Total equivalent units
Cost per equivalent unit		$	$
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, July 1			$
Costs incurred in July
Total costs accounted for by the Roasting Department			$
Cost 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 Packing 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 $14,840 of direct materials, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between June and 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

Arabica Highland 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			5300
Received from materials storeroom			212000
Total units accounted for by the Roasting Department			217300
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, July 1	5300	0	1060
Started and completed in July	207700	207700	207700
Transferred to Packing Department in July	213000	207700	208760
Inventory in process, July 31	4300	4300	3440
Total units to be assigned costs	217300	212000	212200
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for July in Roasting Department		614800	148540
Total equivalent units		212000	212200
Cost per equivalent unit		2.90	0.70
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, July 1			18232
Costs incurred in July			763340
Total costs accounted for by the Roasting Department			781572
Cost allocated to completed and partially completed units:
Inventory in process, July 1 balance			18232
To complete inventory in process, July 1	0	742	742
Cost of completed July 1 work in process			18974
Started and completed in July	602330	145390	747720
Transferred to Packing Department in July			766694
Inventory in process, July 31	12470	2408	14878
Total costs assigned by the Roasting Department			781572
2
	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Increase	0.10	=2.9-(14840/5300)
Change in conversion cost per equivalent unit	Decrease	0.10	=0.7-((18232-14840)/(5300*4/5))