Question

Hana 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., 6,100 units, 1/5 completed					7,198
	31	Direct materials, 274,500 units	329,400				336,598
	31	Direct labor	66,500				403,098
	31	Factory overhead	16,642				419,740
	31	Goods transferred, 275,000 units			?
	31	Bal., ? units, 3/5 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.

6. Hana 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
   Cost per equivalent unit:
   		Direct Materials	Conversion
   Total costs for July in Roasting Department		$	$
   Total equivalent units
   Cost per equivalent unit		$	$
   Costs assigned to production:
   	Direct Materials	Conversion	Total
   Inventory in process, July 1			$
   Costs incurred in July
   Total costs accounted for by the Roasting Department			$
   Costs 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 Molding 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 $6,710 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		$

7. 
   

Answer 1

1.

Hana 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			6100
Received from materials storeroom			274500
Total units accounted for by the Roasting Department			280600
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, July 1	6100	0	4880
Started and completed in July	268900	268900	268900
Transferred to Packing Department in July	275000	268900	273780
Inventory in process, July 31	5600	5600	3360
Total units to be assigned costs	280600	274500	277140
Cost Information
Cost per equivalent unit:
		Direct Materials	Conversion
Total costs for July in Roasting Department		329400	83142
Total equivalent units		274500	277140
Cost per equivalent unit		1.20	0.30
Costs assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, July 1			7198
Costs incurred in July			412542
Total costs accounted for by the Roasting Department			419740
Costs allocated to completed and partially completed units:
Inventory in process, July 1 balance			7198
To complete inventory in process, July 1 (4880 x $0.30)	0	1464	1464
Cost of completed July 1 work in process			8662
Started and completed in July (268900 x $1.20);(268900 x $0.30)	322680	80670	403350
Transferred to Packing Department in July			412012
Inventory in process, July 31 (5600 x $1.20);(3360 x $0.30)	6720	1008	7728
Total costs assigned by the Roasting Department			419740

2.

	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Increase	$                                0.10
Change in conversion cost per equivalent unit	Decrease	$                                0.10

Working:

	Direct Materials	Conversion
Cost per equivalent unit, July 1	$                               1.10	$                                0.40
	($6710/6100)	[($7198-$6710)/1220]
Cost per equivalent unit, July 31	$                               1.20	$                                0.30
(Increase)/Decrease	$                             -0.10	$                                0.10