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., 800 units, 30% completed:
Direct materials (800 × $4.40)	$3,520
Conversion (800 × 30% × $1.75)	420
	$3,940
From Cooking Department, 7,700 units	$34,650
Direct labor	8,540
Factory overhead	4,580

During April, 800 units in process on April 1 were completed, and of the 7,700 units entering the department, all were completed except 600 units that were 90% completed.

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

From Cooking Department, 9,500 units	$44,650
Direct labor	12,000
Factory overhead	4,916

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 250 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 the 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. costs 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

APRIL MONTH
UNITS TO ACCOUNT FOR:
Beginning Work in Process units				800
Add: Units Started in Process				7,700
Total Units to account for:				8,500
UNITS TO BE ACCOUNTED FOR:
Units completed from Beginning WIP				800
Units started and completed				7,100
Ending Work in Process				600
Total Units to be accounted for:				8,500
Equivalent Units:
			Material Cost		Conversion
			% Completion	Units	% Completion	Units
Units completed from Beg. WIP			0%	0	70%	560
Units started and completed			100%	7,100	100%	7,100
Ending Work in Process			100%	600	90%	540
Total Equivalent units				7,700		8,200
COST PER EQUIVALENT UNIT:
			Material		Conversion
Total cost added during the year			34,650		13,120
Equivalent Units			7,700		8,200
Cost per Equivalent unit			4.5		1.6
TOTAL COST ACCOUNTED FOR:
Units Completed from Beginning WIP (800 units)
			Equivalent unit	Cost per EU	Total Cost
Beginning Cost					3940
Material			0	4.5	0
Conversion Cost			560	1.6	896
Cost of units completed from Beg WIP					4836
Units started and Transferred out (7,100 units)
			Equivalent unit	Cost per EU	Total Cost
Material			7,100	4.5	31950
Conversion Cost			7,100	1.6	11360
Total Cost of Units completed and transferred out:					43310
Ending Work in process (600 units)
			Equivalent unit	Cost per EU	Total Cost
Material			600	4.5	2700
Conversison Cost			540	1.6	864
Total cost of Ending Work in process:					3,564
WORK IN PROCESS INVENTORY-FILLING
Balance		3,940	Finished Goods inv.		48,146
Raw material Inv.		34,650
Wages Payable		8,540
Manufacturing Overheads		4,580
Balance		3,564
MAY MONTH
UNITS TO ACCOUNT FOR:
Beginning Work in Process units				600
Add: Units Started in Process				9,500
Total Units to account for:				10,100
UNITS TO BE ACCOUNTED FOR:
Units completed from Beginning WIP				600
Units started and completed				9,250
Ending Work in Process				250
Total Units to be accounted for:				10,100
Equivalent Units:
			Material Cost		Conversion
			% Completion	Units	% Completion	Units
Units completed from Beg. WIP			0%	0	10%	60
Units started and completed			100%	9,250	100%	9,250
Ending Work in Process			100%	250	35%	88
Total Equivalent units				9,500		9,398
COST PER EQUIVALENT UNIT:
			Material		Conversion
Total cost added during the year			44,650		16,916
Equivalent Units			9,500		9,398
Cost per Equivalent unit			4.7		1.8
TOTAL COST ACCOUNTED FOR:
Units Completed from Beginning WIP (600 units)
			Equivalent unit	Cost per EU	Total Cost
Beginning Cost					3564
Material			0	4.7	0
Conversion Cost			60	1.8	108
Cost of units completed from Beg WIP					3672
Units started and Transferred out (9250 units)
			Equivalent unit	Cost per EU	Total Cost
Material			9,250	4.7	43475
Conversion Cost			9,250	1.8	16650
Total Cost of Units completed and transferred out:					60125
Ending Work in process (250 units)
			Equivalent unit	Cost per EU	Total Cost
Material			250	4.7	1175
Conversison Cost			88	1.8	158
Total cost of Ending Work in process:					1,333
WORK IN PROCESS INVENTORY-FILLING
Balance		3,564	Finished Goods inv.		63,797
Raw material Inv.		44,650
Wages Payable		12,000
Manufacturing Overheads		4,916
Balance		1,333
Changes in Cost:
		Inc/Dec		Amount
Direct Material		Increase		0.2
Conversion cost		Increase		0.2