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
(2,700 units, 80% completed):
	Direct materials (2,700 x $10.5)	$28,350
	Conversion (2,700 x 80% x $6.7)	14,472
		$42,822

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

Direct materials transferred from Reaction
	Department: 34,800 units at $10.2 a unit	$354,960
Direct labor		118,190
Factory overhead		113,554

During January, 34,500 units of specialty chemicals were completed. Work in Process—Filling Department on January 31 was 3,000 units, 10% 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	2700	Transferred out	34,500
Started into production	34800	Ending units	3,000
	37500		37500
Equivalent units	Material	Conversion
Beginning units	2700	2700
Completion in current period	0%	20%
A	0	540
Units started and completed	31800	31800
Completion	100%	100%
B	31800	31800
Ending Units	3,000	3,000
Completion	100%	10%
C	3000	300
Total units A+B+C	34800	32640
Cost per equivalent units
Per unit cost	Cost	Total units	Per unit cost
Material cost	354960	34800	10.20
Conversion cost	231744	32640	7.10
Total	586704		17.30

Cost of goods sold	Material	convertion cost
Beginning work in progress A	28350	14472	42822
Beginning inventory completed
Completion	0%	20%
Per unit cost	10.20	7.10
Units	2700	2700
Total cost   B	0	3834	3834
Units started and completed
Completion	100%	100%
Per unit cost	10.20	7.10
Units	31800	31800
Total cost    C	324360	225780	550140
Total cost A+B+C	352710	229614	596796
Ending work in progress
Completion	100%	10%
Per unit cost	10.20	7.10
Units	3,000	3,000
Total cost	30600	2130	32730
	Total cost accounted for		629526

Cost per equivalent unit	Material	Conversion cost
For current period	10.20	7.10
For beginning inventory	10.5	6.70
increase (decrease)	-0.3	0.400