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 2016 were as follows:

Bal., 800 units, 30% completed:
Direct materials (800 × $4.3)	$3,440
Conversion (800 × 30% × $1.75)	420
	$3,860
From Cooking Department, 7,400 units	$32,560
Direct labor	8,528
Factory overhead	4,112

During April, 800 units in process on April 1 were completed, and of the 7,400 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, 9,600 units	$44,160
Direct labor	12,008
Factory overhead	5,088

During May, the units in process at the beginning of the month were completed, and of the 9,600 units entering the department, all were completed except 250 units that were 35% completed.

Required:
1.	(a) Enter the balance as of April 1, 2016, 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

Factory production report April :
	Physical units	Transferred in	Conversion costs	total
wip OB	800		560
Units Started and completed	6800	6800	6800
Tranf. Out	7600
wip CB	600	600	540
Equivalent units		7600	7900
Cost incurred		32560	12640
cost per Eq unit		4.28	1.6
Cost of Op wip		3440	420
Incurred on OP wip		0	896
Total cost of Op wip		3440	1316	4756
Cost of Started & comp		29132.63	10880	40012.63
Total cost of Tranf out				44768.63
Cost of wip CB		2570.53	864	3434.53
Factory production report May :
	Physical units	Transferred in	Conversion costs	total
wip OB	600		60
Units Started and completed	9350	9350	9350
Tranf. Out	9950
wip CB	250	250	87.5
Equivalent units		9600	9497.5
Cost incurred		44160	17096
cost per Eq unit		4.60	1.80
Cost of Op wip		2570.53	864
Incurred on OP wip		0	108.00
Total cost of Op wip		2570.53	972.00	3542.53
Cost of Started & comp		43010	16830.49	59840.49
Total cost of Tranf out				63383.03
Cost of wip CB		1150.00	157.50	1307.50
1a)
WIP ACCOUNT (April):
DEBIT	AMOUNT $	CREDIT	AMOUNT $
OB	3860	FG -Tranf out	45517.47
WIP-Cooking dep.	32560	CB	3542.53
Payroll expense	8528
Factory overhead	4112
Total	49060	Total	49060
1b)
i) Equi units = Mate = 7600 and Conv = 7900
ii) Cost per Eq unit : Mat = $4.28 and Conv = $1.60
iii) Cost of goods finished = $45517.47
iv) Cost of wip CB = $3542.53
2a)
WIP ACCOUNT (April):
DEBIT	AMOUNT $	CREDIT	AMOUNT $
OB	3542.53	FG -Tranf out	63491.03
WIP-Cooking dep.	44160	CB	1307.50
Payroll expense	12008
Factory overhead	5088
Total	64798.53	Total	64798.53
2b)
i) Equi units = Mate = 9600 and Conv = 9497.50
ii) Cost per Eq unit : Mat = $4.60 and Conv = $1.80
iii) Cost of goods finished = $63491.03
iv) Cost of wip CB = $1307.50

3) Cost per eq unit reduced in May for material and increased in May for conversion costs.

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