Question

Equivalent Units and Related Costs; Cost of Production Report; Entries

Dover Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling departments, emerging as finished chemicals.

The balance in the account Work in Process—Filling was as follows on January 1:

Work in Process—Filling Department
(4,100 units, 70% completed):
	Direct materials (4,100 x $13.90)	$56,990
	Conversion (4,100 x 70% x $9.00)	25,830
		$82,820

The following costs were charged to Work in Process—Filling during January:

Direct materials transferred from Reaction
	Department: 52,900 units at $13.60 a unit	$719,440
Direct labor		254,560
Factory overhead		244,571

During January, 52,400 units of specialty chemicals were completed. Work in Process—Filling Department on January 31 was 4,600 units, 90% completed.

Required:

1. Prepare a cost of production report for the Filling Department for January. If an amount is zero, enter "0". If required, round your cost per equivalent unit answers to two decimal places.

Dover Chemical Company
Cost of Production Report-Filling Department
For the Month Ended January 31
Unit Information
Units charged to production:
Inventory in process, January 1
Received from Reaction Department
Total units accounted for by the Filling 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 costs
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for January in Filling Department		$	$
Total equivalent units
Cost per equivalent unit		$	$
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, January 1			$
Costs incurred in January
Total costs accounted for by the Filling Department			$
Cost 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 Filling Department			$

2. Journalize the entries for (1) costs transferred from Reaction to Filling and (2) the cost transferred from Filling to Finished Goods.

(1)
(2)

3. Determine the increase or decrease in the cost per equivalent unit from Decemberto January for direct materials and conversion costs. 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		$

4. The cost of production report may be used as the basis for allocating product costs between and . The report can also be used to control costs by holding each department head responsible for the units entering production and the costs incurred in the department. Any differences in unit product costs from one month to another, such as those in part (3), can be studied carefully and any significant differences investigated.

Answer 1

	Dover Chemical Company
	Cost of Production Report-Filling Department
	For the Month Ended January 31
	Unit Information
	Units charged to production:
	Inventory in process, January 1			4100
	Received from Reaction Department			52900
	Total units accounted for by the Filling Department			57000
	Units to be assigned costs:
			Equivalent Units
		Whole Units	Direct Materials	Conversion
	Inventory in process, January 1	4100	0	1230		4100*30%
	Started and completed in January	48300	48300	48300
	Transferred to finished goods in January	52400	48300	49530
	Inventory in process, January 31	4600	4600	4140
	Total units to be assigned costs	57000	52900	53670
	Cost Information
	Costs per equivalent unit:
			Direct Materials	Conversion
	Total costs for January in Filling Department		719440	499131	1218571
	Total equivalent units		52900	53670
	Cost per equivalent unit		13.6	9.3
	Costs charged to production:
		Direct Materials	Conversion	Total
	Inventory in process, January 1			82820
	Costs incurred in January			1218571
	Total costs accounted for by the Filling Department			1301391
	Cost allocated to completed and partially completed units:
	Inventory in process, January 1 balance			82820
	To complete inventory in process, January 1	0	11439	11439
	Cost of completed January 1 work in process			94259
	Started and completed in January	656880	449190	1106070
	Transferred to finished goods in January			1200329
	Inventory in process, January 31	62560	38502	101062
	Total costs assigned by the Filling Department			1301391
2	Work in process - Filling Department	719440
	To Work in process - Reaction Department		719440
	Finished Goods	1200329
	To Work in process - Filling Department		1200329
3	Direct Materials	-0.3	Decrease	(13.60-13.90)
	Conversion	0.3	Increase	(9.30-9)
4	The cost of production report may be used as the basis for allocating product costs between work in process and Finished Goods. The report can also be used to control costs by holding each department head responsible for the units entering production and the costs incurred in the department. Any differences in unit product costs from one month to another such as those in part (3) can be studied carefully and any significant differences investigated