In: Accounting
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 2016 were as follows:
Bal., 1,000 units, 30% completed: | |
Direct materials (1,000 × $4.5) | $4,500 |
Conversion (1,000 × 30% × $1.75) | 525 |
$5,025 | |
From Cooking Department, 7,700 units | $35,420 |
Direct labor | 8,500 |
Factory overhead | 6,494 |
During April, 1,000 units in process on April 1 were completed, and of the 7,700 units entering the department, all were completed except 700 units that were 90% completed.
Charges to Work in Process-Filling for May were as follows:
From Cooking Department, 9,500 units | $45,600 |
Direct labor | 12,040 |
Factory overhead | 6,646 |
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 350 units that were 35% completed.
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3. | Comment on the change in costs per equivalent unit for March through May for direct materials and conversion costs. |