Question

The debits to Work in Process—Roasting Department for Morning Brew Coffee Company for August, together with information concerning production, are as follows:

Work in process, August 1, 800 pounds, 10% completed				$3,912*
	*Direct materials (800 X $4.7)	$3,760
	Conversion (800 X 10% X $1.9)	$152
		$3,912
Coffee beans added during August, 25,000 pounds				116,250
Conversion costs during August				50,400
Work in process, August 31, 1,300 pounds, 60% completed				?
Goods finished during August, 24,500 pounds				?

All direct materials are placed in process at the beginning of production.

a. Prepare a cost of production report, presenting the following computations:

1. Direct materials and conversion equivalent units of production for August
2. Direct materials and conversion costs per equivalent unit for August
3. Cost of goods finished during August
4. Cost of work in process at August 31

If an amount is zero, enter in "0". For the cost per equivalent unit, round your answer to two decimal places.

Morning Brew Coffee Company
Cost of Production Report-Roasting Department
For the Month Ended August 31
Unit Information
Units charged to production:
Inventory in process, August 1
Received from materials storeroom
Total units accounted for by the Roasting Department
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials (1)	Conversion (1)
Inventory in process, August 1
Started and completed in August
Transferred to finished goods in August
Inventory in process, August 31
Total units to be assigned costs
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for August in Roasting Department		$	$
Total equivalent units
Cost per equivalent unit (2)		$	$
Costs assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, August 1			$
Costs incurred in August
Total costs accounted for by the Roasting Department			$
Costs allocated to completed and partially completed units:
Inventory in process, August 1 balance			$
To complete inventory in process, August 1	$	$
Cost of completed August 1 work in process			$
Started and completed in August
Transferred to finished goods in August (3)			$
Inventory in process, August 31 (4)
Total costs assigned by the Roasting Department			$

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

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

Answer 1

Working for Answer a

Cost of production report, presenting the computations for Direct materials and conversion equivalent units of production for August

Details	Qty (Pound)	Rate $/Pound	Amount in $	Remarks
Cost of Opening WIP	80	1.9	152
Cost of Direct Material	800	4.7	3760
Cost of Coffee Beans	25000	4.65	116250	Rate is derived ( $116250/25000 pounds)
Total DirectCost	25880		120162
Add Conversion Cost			50400
Less Wastage	600		(78)
Net Cost of Equivalent Units	25280	6.75	170640	(Unit Rate is derived as ($170640/25280 pounds)
Finished Goods Cost	24500	6.75	165375
Less Cost of Closing WIP	780	6.75	5265

Working Wastages

Finished Production during August 24500 Pounds

Equivalent Qty Closing WIP (60% completed of 1300 Pounds) 780 Pounds

Total ouput (A) 25280 Pounds

Total Input

Opening WIP 80 Pounds

Direct Material added 800 Pounds

Coffee Beans consumed 25000 Pounds

Total Input (B) 25880 Pounds

Material Loss during process (B-A) 600 POUNDS

Answer a

1. Direct materials and conversion equivalent units of production for August - 25880 Pounds
2. Direct materials and conversion costs per equivalent unit for August - $ 11.50/Pound
3. Cost of goods finished during August - 24500 Pounds @ $ 11.50/Pound = $ 281750
4. Cost of work in process at August 31 - 780 Pounds @ $11.50 /Pound =$ 8970

Answe b

Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (July). If required, round your answers to the nearest cent.

Month	July 2020	Aug 2020	Increase/ (Decrease) - Amount $/Pound
Change in direct materials cost per equivalent unit	4.70	4.75
Change in conversion cost per equivalent unit	1.90	2.00	0.10/Pound

It is concluded from thw working that Both Direct Material Cost and Conversion is increased in the month of August 2020.

1. Total DirectCost for the month of August 2020 - $ 120162

Equivalent Production 25280 pounds

Direct Cost Per Pound for the month of August 2020 $120162/25280 pounds = $ 4.75/Pound

2. Conversion Cost for the month of August 2020 - $ 50400

Equivalent Production 25280 pounds

Conversion Cost Per Pound for the month of August 2020 $50400/25280 pounds = $ 2/Pound