Question

The Cutting Department of Karachi Carpet Company provides the following data for January. Assume that all materials are added at the beginning of the process.

Work in process, January 1, 9,000 units, 60% completed		$87,480*
*Direct materials (9,000 × $7.2)	$64,800
Conversion (9,000 × 60% × $4.2)	22,680
	$87,480
Materials added during January from Weaving Department, 138,800 units		$1,020,180
Direct labor for January		267,669
Factory overhead for January		327,150
Goods finished during January (includes goods in process, January 1), 140,400 units		—
Work in process, January 31, 7,400 units, 45% completed		—

a. Prepare a cost of production report for the Cutting Department. If an amount is zero or a blank, enter in "0". For the cost per equivalent unit computations, round your answers to two decimal places.

Karachi Carpet Company
Cost of Production Report-Cutting Department
For the Month Ended January 31
Unit Information
Units charged to production:
Inventory in process, January 1
Received from Weaving Department
Total units accounted for by the Cutting Department
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, January 1
Started and completed in January
Transferred to finished goods in January
Inventory in process, January 31
Total units to be assigned cost
Cost Information
Cost per equivalent unit:
		Direct Materials	Conversion
Total costs for January in Cutting Department		$	$
Total equivalent units
Cost per equivalent unit		$	$
Costs assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, January 1			$
Costs incurred in January
Total costs accounted for by the Cutting Department			$
Costs allocated to completed and partially completed units:
Inventory in process, January 1 balance			$
To complete inventory in process, January 1	$	$
Cost of completed January 1 work in process			$
Started and completed in January	$
Transferred to finished goods in January			$
Inventory in process, January 31
Total costs assigned by the Cutting Department			$

b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (December). If required, round your answers to two decimal places.

	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit		$
Change in conversion cost per equivalent unit		$

Answer 1

FIFO method
Beggining units	9000	Transferred out	1,40,400
Started into production	138800	Ending units	7,400
	147800		147800
Equivalent units	Material	Conversion
Beginning units	9000	9000
Completion in current period	0%	40%
A	0	3600
Units started and completed	131400	131400
Completion	100%	100%
B	131400	131400
Ending Units	7,400	7,400
Completion	100%	45%
C	7400	3330
Total units A+B+C	138800	138330
Cost per equivalent units
Per unit cost	Cost	Total units	Per unit cost
Material cost	1020180	138800	7.35
Conversion cost	594819	138330	4.30
Total	1614999		11.65

Cost of goods sold	Material	convertion cost
Beginning work in progress A	64800	22680	87480
Beginning inventory completed
Completion	0%	40%
Per unit cost	7.35	4.30
Units	9000	9000
Total cost   B	0	15480	15480
Units started and completed
Completion	100%	100%
Per unit cost	7.35	4.30
Units	131400	131400
Total cost    C	965790	565020	1530810
Total cost A+B+C	1030590	580500	1633770
Ending work in progress
Completion	100%	45%
Per unit cost	7.35	4.30
Units	7,400	7,400
Total cost	54390	14319	68709
	Total cost accounted for		1702479

Cost per equivalent unit	Material	Conversion cost
For current period	7.35	4.30
For beginning inventory	7.2	4.20
increase (decrease)	0.15	0.10