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.

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

   Work in Process—Filling Department
   (1,900 units, 60% completed):
   	Direct materials (1,900 x $10.70)	$20,330
   	Conversion (1,900 x 60% x $6.90)	7,866
   		$28,196

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

   Direct materials transferred from Reaction
   	Department: 24,500 units at $10.50 a unit	$257,250
   Direct labor		87,660
   Factory overhead		84,231

   During January, 24,300 units of specialty chemicals were completed. Work in Process—Filling Department on January 31 was 2,100 units, 50% 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 costs transferred from Filling to Finished Goods.

   (1)
   (2)

   3. Determine the increase or decrease in the cost per equivalent unit from December to 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.

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Answer 1