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., 4,600 units, 4/5 completed					11,408
	31	Direct materials, 207,000 units	434,700				446,108
	31	Direct labor	82,800				528,908
	31	Factory overhead	20,700				549,608
	31	Goods transferred, 207,000 units			?
	31	Bal., ? units, 4/5 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.

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 $9,200 of direct materials, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between February 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		$

When computing cost per equivalent units,

Answer 1

	Hana Coffee Company
1)	Cost of Production Report-Roasting Department
	For the month ended July 31st
			Equivalent Units
	Units	Whole Units	Direct Materials	Conversion
	Units charged to production:
	Inventory in Process July 1st,	4600
	Started and completed in July	207000
	Total units accounted for by the Roasted Department	211600
	Total units to be assigned costs
	Inventory in Process July 1st,	4600	0	920	4600*(1-80%)
	Started and completed in July(207000-4600)	202400	202400	202400
	Transferred to packing department in July	207000	202400	203320
	Inventory in Process July 31st,	4600	4600	3680	4600*80%
	Total units to be assigned costs	211600	207000	207000
		Direct Material	Conversion
	Total cost for July in Roasting Department=(A)	434700	$          1,03,500.00
	Total Equivalent units=(B)	207000	$          2,07,000.00
	Cost per Equivalent units=(A)/(B)	2.1	$                        0.50
	Cost assigned to production:	Direct Material	Conversion	Total
	Inventory in Process,July 1st			$                11,408.00
	Cost incurred in July($446108+$528908+$549608)			$             5,38,200.00
	Total cost accounted for by the Roasting Department			$             5,49,608.00
	Cost allocated to completed and partially completed units:
	Inventory in Process,July 1st balance			11408
	To complete inventory in process,July 1st	0	460	460
	Cost of completed July 1st,Work in Process			11868
	Started and completed in July(202400*$2.1),(202400*.50)	425040	101200	526240
	Transferred to Molding Department in July			538108
	Inventory in Process,July 31st(3680*$2.1),(3680*.50)	9660	1840	11500
	Total cost assigned by the Roasting Department			$             5,49,608.00
2)		June	July
	Direct Material cost
	Cost	9200	434700
	Units	4600	207000
	Cost per unit=(A)/(B)	2	2.1
	Conversion cost per unit
	Cost=($11408-9200)=(A)	2208	103500
	Units=(4600*80%)=(B)	3680	207000
	Cost per Equivalent units=(A)/(B)	0.6	0.5
	Material cost increased from $2 to $2.1 and conversion cost decreased from 0.6 to 0.5