Question

White Diamond Flour Company manufactures flour by a series of three processes, beginning with wheat grain being introduced in the Milling Department. From the Milling Department, the materials pass through the Sifting and Packaging departments, emerging as packaged refined flour.

The balance in the account Work in Process-Sifting Department was as follows on July 1:

Work in Process-Sifting Department (850 units, 3/5 completed):

Direct materials (850 × $2.15) $1,828

Conversion (850 × 3/5 × $0.50) 255 $2,083.

The following costs were charged to Work in Process-Sifting Department during July:

Direct materials transferred from Milling Department: 15,500 units at $2.25 a unit $34,875

Direct labor 4,540 Factory overhead 4,029

During July, 15,050 units of flour were completed. Work in Process-Sifting Department on July 31 was 1,300 units, 45 completed.

Required:

1. Prepare a cost of production report for the Sifting Department for July. If required, round your cost per equivalent unit answers to two decimal places. If an amount is zero, enter zero “0”.

2. Journalize the entries for costs transferred from Milling to Sifting and the costs transferred from Sifting to Packaging. Refer to the Chart of Accounts for correct wording of account titles.

3. Determine the increase or decrease in the cost per equivalent unit from June to July for direct materials and conversion costs. If required, round your answers to two decimal places.

4. Discuss the uses of the cost of production report and the results of part (3).

Answer 1

Sollution 1
	White Diamond Flour Company
	Cost of Prduction report -Shifting Department (weighted avg method)
	Month Ended July 31
			Transferred In	Labour
	Detail	Physical Units	%	EUP	%	EUP
	Units To Account For
	Work In process Beginning	850
	Add:- Started during current period	15500
	Total Units To Account For	16350
	Units Accounted for
	Units Transferred Out	15050	100%	15050	100%	15050
	units of Ending work in process	1300	100%	1300	4/5	1040
	Equivalent units of production	16350		16350		16090
	COSTS
	Cost per EUP	Total Production Cost	Transferred In	Labour
	Cost in the begnning work in progress inventory	$2,083.00	$1,828.00	$255.00
	Cost Addrd during the period	$43,444.00	$34,875.00	$8,569.00
	Total Cost to account for	$45,527.00	$36,703.00	$8,824.00
	Equivalent units of Production		16350	16090
	Cost per Equivalent unit of Production		$2.24	$0.55
	Cost Assignment and Reconciliation	Total Production Cost	EUP Transferred In	Transferred In	EUP Labour	Labour
	Good units completed and transferred out
	a. Good units completed and transferred out	$42,038.37	15050	$33,784.72	15050	$8,253.65
	b. Ending work in process	$3,488.63	1300	$2,918.28	1040	$570.35
	Total Costs accounted for	$45,527.00	16350	$36,703.00	16090	$8,824.00
Sollution 2
Date	General Journal	Debit	credit
1	Work In process-Shifting	$34,875.00
	Work In process-Milling		$34,875.00
	(To costs transferred from Milling to Sifting )
	Work In process-Packaging	$42,038.37
	Work In process-Shifting		$42,038.37
	(To costs transferred from Sifting to Packaging)
Sollution 3
		June	July
	Direct Material	$2.15	$2.24	$0.09	Increase
	Conversion cost	$0.50	$0.55	$0.05	Increase
Sollution 4
	Cost production report shows how cost is allocated to direct material and conversion cost.
	Cost per equivalent units are calculated and cost is transferred to equivalent units