Question

In: Accounting

Arabica Highland Coffee Company roasts and packs coffee beans. The process begins by placing coffee beans...

Arabica Highland 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., 4,100 units, 2/5 completed 10,168
31 Direct materials, 164,000 units 377,200 387,368
31 Direct labor 79,300 466,668
31 Factory overhead 19,832 486,500
31 Goods transferred, 165,000 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.

Arabica Highland 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
Costs per equivalent unit:
Direct Materials Conversion
Total costs for July in Roasting Department $ $
Total equivalent units
Cost per equivalent unit $ $
Costs charged to production:
Direct Materials Conversion Total
Inventory in process, July 1 $
Costs incurred in July
Total costs accounted for by the Roasting Department $
Cost 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 Packing 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 $9,020 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 $

Solutions

Expert Solution

Solution 1:

Arabica Highland 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 4100
Received from materials storeroom 164000
Total units accounted for by the Roasting Department 168100
Units to be assigned costs:
Equivalent Units
Whole Units Direct Materials Conversion
Inventory in process, July 1 4100 0 2460
Started and completed in July 160900 160900 160900
Transferred to Packing Department in July 165000 160900 163360
Inventory in process, July 31 3100 3100 1860
Total units to be assigned costs 168100 164000 165220
Cost Information
Costs per equivalent unit:
Direct Materials Conversion
Total costs for July in Roasting Department $377,200.00 $99,132.00
Total equivalent units 164000 165220
Cost per equivalent unit $2.30 $0.60
Costs charged to production:
Direct Materials Conversion Total
Inventory in process, July 1 $9,020.00 $1,148.00 $10,168.00
Costs incurred in July $377,200.00 $99,132.00 $476,332.00
Total costs accounted for by the Roasting Department $386,220.00 $100,280.00 $486,500.00
Cost allocated to completed and partially completed units:
Inventory in process, July 1 balance $9,020.00 $1,148.00 $10,168.00
To complete inventory in process, July 1 $0.00 $1,476.00 $1,476.00
Cost of completed July 1 work in process $9,020.00 $2,624.00 $11,644.00
Started and completed in July $370,070.00 $96,540.00 $466,610.00
Transferred to Packing Department in July $379,090.00 $99,164.00 $478,254.00
Inventory in process, July 31 $7,130.00 $1,116.00 $8,246.00
Total costs assigned by the Roasting Department $386,220.00 $100,280.00 $486,500.00

Solution 2:

Direct material cost per unit for June = $9,020 / 4100 = $2.20 per unit

Conversion cost per unit for June = $1,148 / (4100*2/5) = $0.70 per unit

Change in direct materials cost per equivalent unit from June to July = $2.30 - $2.20 = $0.10 Increase

Change in conversion cost per equivalent unit from June to July = $0.60 - $0.70 = $0.10 Decrease


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