Question

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
(3,400 units, 70% completed):
	Direct materials (3,400 x $16.80)	$57,120
	Conversion (3,400 x 70% x $10.90)	25,942
		$83,062

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

Direct materials transferred from Reaction
	Department: 43,900 units at $16.50 a unit	$724,350
Direct labor		245,730
Factory overhead		236,102

During January, 43,500 units of specialty chemicals were completed. Work in Process—Filling Department on January 31 was 3,800 units, 40% 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

FIFO method
Beggining units	3400	Transferred out	43,500
Started into production	43900	Ending units	3,800
	47300		47300
Equivalent units	Material	Conversion
Beginning units	3400	3400
Completion in current period	0%	30%
A	0	1020
Units started and completed	40100	40100
Completion	100%	100%
B	40100	40100
Ending Units	3,800	3,800
Completion	100%	40%
C	3800	1520
Total units A+B+C	43900	42640
Cost per equivalent units
Per unit cost	Cost	Total units	Per unit cost
Material cost	724350	43900	16.50
Conversion cost	481832	42640	11.30
Total	1206182		27.80

Cost of goods sold	Material	convertion cost
Beginning work in progress A	57120	25942	83062
Beginning inventory completed
Completion	0%	30%
Per unit cost	16.50	11.30
Units	3400	3400
Total cost   B	0	11526	11526
Units started and completed
Completion	100%	100%
Per unit cost	16.50	11.30
Units	40100	40100
Total cost    C	661650	453130	1114780
Total cost A+B+C	718770	464656	1209368
Ending work in progress
Completion	100%	40%
Per unit cost	16.50	11.30
Units	3,800	3,800
Total cost	62700	17176	79876

Cost per equivalent unit	Material	Conversion cost
For current period	16.50	11.30
For beginning inventory	16.8	10.90
increase (decrease)	-0.3	0.40