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., 6,100 units, 4/5 completed					12,200
	31	Direct materials, 274,500 units	466,650				478,850
	31	Direct labor	87,200				566,050
	31	Factory overhead	21,744				587,794
	31	Goods transferred, 275,000 units			?
	31	Bal., ? units, 2/5 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 $9,760 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		$

Answer 1

Answer 1.
Hana Coffee Company
Cost of Production Report - Roating Department
For the Month ended July 31
Particulars		Equivalent Units
	Physical Units	Materials	Conversion Costs
Units Charged to Priduction
Inventory in Process, Jul 1	6,100
Received From Materials Storeroom	274,500
Total units accounted for by the Roasting Department	280,600
Units to be assigned costs:
Goods Units Completed & transferred out:
Inventory in Process, Jul 1	6,100	-	1,220
(0% materials, 20% conversion costs)
Started & Completed (275,000 - 6,100)	268,900	268,900	268,900
Transferred to Packing Department in July	275,000	268,900	270,120
Work in process, Jul 31 (280,600 - $275,000)	5,600	5,600	2,240
(100% materials, 40% conversion costs)
Equivalent units accounted for	280,600	274,500	272,360
Cost Information
	Materials	Conversion Costs	Total
Total Cost for July in Roasting Department
WIP, Beginning			12,220
Cost added in current period	466,650	108,944	575,594
Total cost to be account for	466,650	108,944	587,814
Cost added in current period	466,650	108,944	575,594
Equivalent Units of work done in current Period	274,500	272,360
Cost per Equivalent Unit	1.70	0.40	2.10
Assignment of Costs:
Goods Units and Completed out (275,000 Units)
WIP, Beginning -6,100 Units	-	-	12,220
Cost added to Beg. WIP in Current period	-	488	488
		(1,220 Units X $0.40)
Total of Beginning Inventory	-	488	12,708
Started and completed - 268,900 Units	457,130	107,560	564,690
	(268,900 units X $1.70)	(268,900 units X $0.40)
Total Cost of good units completed & transferred out	457,130	108,048	577,398
WIP, Ending - 5,600 Units	9,520	896	10,416
	(5,600 units X $1.70)	(2,240 units X $0.40)
Total Cost accounted For	466,650	108,944	587,814
Answer 2.
Calculation of Cost per Unit - Oct 1
	Materials	Conversion Costs	Total
WIP - July 1, Cost	9,760	2,440	12,200
Equivalent No. of Unit - WIP - Jul 1	6,100	4,880
Cost pet Equivalent Unit	1.60	0.50	2.10
	Materials	Conversion Costs	Total
Cost per Equivalent Unit - Beginning Inventory	1.60	0.50	2.10
Cost per Equivalent Unit -October	1.70	0.40	2.10
Increase (Decrease) in Cost per Unit	0.10	(0.10)	-