Question

Cost of Production Report

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, 12,200 units, 70% completed		$137,006*
*Direct materials (12,200 × $7.8)	$95,160
Conversion (12,200 × 70% × $4.9)	41,846
	$137,006
Materials added during January from Weaving Department, 188,000 units		$1,485,200
Direct labor for January		415,485
Factory overhead for January		507,815
Goods finished during January (includes goods in process, January 1), 190,200 units		—
Work in process, January 31, 10,000 units, 30% 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 costs
Cost Information
Costs 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			$
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 Cutting Department			$

b. Compute and evaluate the change in the costs 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

Part A

Karachi Carpet Company
Cost of Production Report-Cutting Department
For the Month Ended January 31
UNITS	Whole Units	Equivalent Units
Direct Materials	Conversion
Units charged to production:
Inventory in process, January 1	12,200
Received from Weaving Department	188,000
Total units accounted for by the Cutting Department	200,200
Units to be assigned costs:
Inventory in process, January 1 (30% completed)	12,200	-	3,660
Started and completed in January	178,000	178,000	178,000
Transferred to finished goods in January	190,200	178,000	181,660
Inventory in process, January 31 (30% completed)	10,000	10,000	3,000
Total units to be assigned costs	200,200	188,000	184,660
COSTS	Costs
Direct Materials	Conversion	Total
Cost per equivalent unit:
Total units to be assigned costs	$ 1,485,200	$ 923,300
Total equivalent units	188,000	184,660
Cost per equivalent unit	$         7.90	$       5.00	$      12.90
Costs assigned to production:
Inventory in process, January 1	$     95,160	$   41,846	$   137,006
Costs incurred in January	$ 1,485,200	$ 923,300	$2,408,500
Total costs accounted for by the Cutting Department	$ 1,580,360	$ 965,146	$2,545,506
Cost allocated to completed and partially completed units:
Inventory in process, January 1-balance	$     95,160	$   41,846	$   137,006
To complete inventory in process, January 1	$            -	$   18,300	$     18,300
Cost of completed January 1 work in process	$     95,160	$   60,146	$   155,306
Started and completed in January	$ 1,406,200	$ 890,000	$2,296,200
Transferred to finished goods in January	$ 1,501,360	$ 950,146	$2,451,506
Inventory in process, January 31	$     79,000	$   15,000	$     94,000
Total costs assigned by the Cutting Department	$ 1,580,360	$ 965,146	$2,545,506

Part B

	Direct materials	Conversion Costs
Cost per equivalent unit in January	$            7.90	$          5.00
Cost per equivalent unit in Dec last year	$            7.80	$          4.90
Increase in the cost per equivalent unit	$            0.10	$          0.10

Calculation