Question

Cost of Production Report

Arabica Highland Coffee Company roasts and packs coffee beans. The process begins by placing coffee beans into the Roasting Department. From the Roasting Department, coffee beans are then transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at July 31:

ACCOUNT Work in Process—Roasting Department							ACCOUNT NO.
Date		Item	Debit		Credit		Balance
							Debit		Credit
July	1	Bal., 5,400 units, 4/5 completed					10,800
	31	Direct materials, 216,000 units	367,200				378,000
	31	Direct labor	68,300				446,300
	31	Factory overhead	17,124				463,424
	31	Goods transferred, 217,000 units			?
	31	Bal., ? units, 1/5 completed					?

Required:

1. Prepare a cost of production report, and identify the missing amounts for Work in Process—Roasting Department. If an amount is zero, enter "0". When computing cost per equivalent units, round to two decimal places.

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

2. Assuming that the July 1 work in process inventory includes $8,640 of direct materials, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between June and 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

Arabica Highland Coffee Company
Cost of Production Report-Roasting Department
For the Month Ended July 31
Unit Information
Units charged to production:
Inventory in process, July 1			5400
Received from materials storeroom			216000
Total units accounted for by the Roasting Department			221400
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, July 1	5400	0	1080
Started and completed in July	211600	211600	211600
Transferred to Packing Department in July	217000	211600	212680
Inventory in process, July 31	4400	4400	880
Total units to be assigned costs	221400	216000	213560
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for July in Roasting Department		367200	85424
Total equivalent units		216000	213560
Cost per equivalent unit		1.7	0.4
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, July 1			10800
Costs incurred in July			452624
Total costs accounted for by the Roasting Department			463424
Cost allocated to completed and partially completed units:
Inventory in process, July 1 balance			10800
To complete inventory in process, July 1	0	432	432
Cost of completed July 1 work in process			11232
Started and completed in July	359720	84640	444360
Transferred to Packing Department in July			455592
Inventory in process, July 31	7480	352	7832
Total costs assigned by the Roasting Department			463424
2
	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Increase	0.1	=1.7-(8640/5400)
Change in conversion cost per equivalent unit	Decrease	0.1	=0.4-((10800-8640)/(5400*4/5))