Question

Cost of Production Report

Venus Chocolate Company processes chocolate into candy bars. The process begins by placing direct materials (raw chocolate, milk, and sugar) into the Blending Department. All materials are placed into production at the beginning of the blending process. After blending, the milk chocolate is then transferred to the Molding Department, where the milk chocolate is formed into candy bars. The following is a partial work in process account of the Blending Department at March 31, 2016:

ACCOUNT Work in Process—Blending Department							ACCOUNT NO.
Date		Item	Debit		Credit		Balance
							Debit		Credit
Mar.	1	Bal., 6,400 units, 2/5 completed					18,048
	31	Direct materials, 256,000 units	665,600				683,648
	31	Direct labor	143,100				826,748
	31	Factory overhead	35,764				862,512
	31	Goods transferred, 257,000 units			?
	31	Bal., ? units, 1/5 completed					?

Required:

1. Prepare a cost of production report, and identify the missing amounts for Work in Process—Blending Department. If an amount is zero, enter "0". When computing cost per equivalent units, round to two decimal places.

Venus Chocolate Company
Cost of Production Report-Blending Department
For the Month Ended March 31, 2016
Unit Information
Units charged to production:
Inventory in process, March 1
Received from materials storeroom
Total units accounted for by the Blending Department
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, March 1
Started and completed in March
Transferred to Molding Department in March
Inventory in process, March 31
Total units to be assigned costs
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for March in Blending Department		$	$
Total equivalent units
Cost per equivalent unit		$	$
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, March 1			$
Costs incurred in March
Total costs accounted for by the Blending Department			$
Cost allocated to completed and partially completed units:
Inventory in process, March 1 balance			$
To complete inventory in process, March 1	$	$
Cost of completed March 1 work in process			$
Started and completed in March
Transferred to Molding Department in March			$
Inventory in process, March 31
Total costs assigned by the Blending Department			$

2. Assuming that the March 1 work in process inventory includes $16,000 of direct materials, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between February and March. 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		$

Answer 1

Solution 1:

Venus Chocolate Company
Cost of Production Report-Blending Department
For the Month Ended March 31
Unit Information
Units charged to production:
Inventory in process, Mar 1			6400
Received from materials storeroom			256000
Total units accounted for by the Blending Department			262400
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, March 1	6400	0	3840
Started and completed in March	250600	250600	250600
Transferred to Molding Department in March	257000	250600	254440
Inventory in process, March 31	5400	5400	1080
Total units to be assigned costs	262400	256000	255520
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for March in Blending Department		$665,600.00	$178,864.00
Total equivalent units		256000	255520
Cost per equivalent unit		$2.60	$0.70
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, March 1			$18,048.00
Costs incurred in March	$665,600.00	$178,864.00	$844,464.00
Total costs accounted for by the Blending Department	$665,600.00	$178,864.00	$862,512.00
Cost allocated to completed and partially completed units:
Inventory in process, July 1 balance			$18,048.00
To complete inventory in process, July 1	$0.00	$2,688.00	$2,688.00
Cost of completed July 1 work in process			$20,736.00
Started and completed in July	$651,560.00	$175,420.00	$826,980.00
Transferred to Molding Department in July			$847,716.00
Inventory in process, July 31	$14,040.00	$756.00	$14,796.00
Total costs assigned by the Blending Department			$862,512.00

Solution 2:

Particulars	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit ($2.60 - $2.50)	Increase	$0.10
Change in conversion cost per equivalent unit ($0.70 - $0.80)	decrease	$0.10