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
(4,100 units, 80% completed):
	Direct materials (4,100 x $17.2)	$70,520
	Conversion (4,100 x 80% x $11.2)	36,736
		$107,256

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

Direct materials transferred from Reaction
	Department: 52,900 units at $16.9 a unit	$894,010
Direct labor		296,180
Factory overhead		284,570

During January, 52,400 units of specialty chemicals were completed. Work in Process—Filling Department on January 31 was 4,600 units, 30% 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
Cost per equivalent unit:
		Direct Materials	Conversion
Total costs for January in Filling 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 Filling Department			$
Costs 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 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. Discuss the uses of the cost of production report and the results of part (3).

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	4100	Transferred out	52,400
Started into production	52900	Ending units	4,600
	57000		57000
Equivalent units	Material	Conversion
Beginning units	4100	4100
Completion in current period	0%	20%
A	0	820
Units started and completed	48300	48300
Completion	100%	100%
B	48300	48300
Ending Units	4,600	4,600
Completion	100%	30%
C	4600	1380
Total units A+B+C	52900	50500
Cost per equivalent units
Per unit cost	Cost	Total units	Per unit cost
Material cost	894010	52900	16.90
Conversion cost	580750	50500	11.50
Total	1474760		28.40

Cost of goods sold	Material	convertion cost
Beginning work in progress A	70520	36736	107256
Beginning inventory completed
Completion	0%	20%
Per unit cost	16.90	11.50
Units	4100	4100
Total cost   B	0	9430	9430
Units started and completed
Completion	100%	100%
Per unit cost	16.90	11.50
Units	48300	48300
Total cost    C	816270	555450	1371720
Total cost A+B+C	886790	564880	1488406
Ending work in progress
Completion	100%	30%
Per unit cost	16.90	11.50
Units	4,600	4,600
Total cost	77740	15870	93610
	Total cost accounted for		1582016

Cost per equivalent unit	Material	Conversion cost
For current period	16.90	11.50
For beginning inventory	17.2	11.20
increase (decrease)	-0.3	0.300