Question

Cost of Production Report

The Cutting Department of Karachi Carpet Company provides the following data for January. Assume that all materials are added at the beginning of the process.

Work in process, January 1, 11,000 units, 60% completed		$141,020*
*Direct materials (11,000 × $10)	$110,000
Conversion (11,000 × 60% × $4.7)	31,020
	$141,020
Materials added during January from Weaving Department, 169,600 units		$1,704,480
Direct labor for January		364,176
Factory overhead for January		445,104
Goods finished during January (includes goods in process, January 1), 171,600 units		—
Work in process, January 31, 9,000 units, 40% completed		—

a. Prepare a cost of production report for the Cutting Department. If an amount is zero or a blank, enter in "0". For the cost per equivalent unitcomputations, round your answers to two decimal places.

Karachi Carpet Company
Cost of Production Report-Cutting Department
For the Month Ended January 31
Unit Information
Units charged to production:
Inventory in process, January 1
Received from Weaving Department
Total units accounted for by the Cutting Department
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, January 1	11,000	0
Started and completed in January	160,000	160,000	160,000
Transferred to finished goods in January	171,600	160,600
Inventory in process, January 31	9,000	9,000
Total units to be assigned cost	180,600	169,600
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for January in Cutting Department		$1,704,480	$809,280
Total equivalent units		169,600
Cost per equivalent unit		$10.05	$
Costs assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, January 1			$141,020
Costs incurred in January			2,513,760
Total costs accounted for by the Cutting Department			$2,654,780
Costs allocated to completed and partially completed units:
Inventory in process, January 1 balance			$141,020
To complete inventory in process, January 1	$0	$
Cost of completed January 1 work in process			$
Started and completed in January	$1,614,030
Transferred to finished goods in January			$
Inventory in process, January 31	90,450
Total costs assigned by the Cutting Department			$

b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (December). If required, round your answers to two decimal places.

	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Increase	$
Change in conversion cost per equivalent unit	Increase	$

Answer 1

Karachi Carpet Company
Cost of Production Report-Cutting Department
For the Month Ended January 31
Unit Information
Units charged to production:
Inventory in process, January 1			11000
Received from Weaving Department			169600
Total units accounted for by the Cutting Department			180600
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, January 1	11,000	0	4400
Started and completed in January	160,600	160,600	160,600
Transferred to finished goods in January	171,600	160,600	165,000
Inventory in process, January 31	9,000	9,000	3,600
Total units to be assigned cost	180,600	169,600	168,600
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for January in Cutting Department		$1,704,480	$809,280
Total equivalent units		169,600	168,600
Cost per equivalent unit		$10.05	$4.80
Costs assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, January 1			$141,020
Costs incurred in January			2,513,760
Total costs accounted for by the Cutting Department			$2,654,780
Costs allocated to completed and partially completed units:
Inventory in process, January 1 balance			$141,020
To complete inventory in process, January 1	$0	$21,120.00	$21,120.00
Cost of completed January 1 work in process			$162,140.00
Started and completed in January	$1,614,030	$770,880	$2,384,910
Transferred to finished goods in January			$2,547,050.00
Inventory in process, January 31	90,450	17,280	107,730
Total costs assigned by the Cutting Department			$2,654,780.00
b
	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Increase	0.05
Change in conversion cost per equivalent unit	Increase	0.1