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, 14,600 units, 75% completed		$182,135*
*Direct materials (14,600 × $9.40)	$137,240
Conversion (14,600 × 75% × $4.10)	44,895
	$182,135
Materials added during January from Weaving Department, 224,800 units		$2,146,840
Direct labor for January		415,894
Factory overhead for January		508,316
Goods finished during January (includes goods in process, January 1), 227,400 units		—
Work in process, January 31, 12,000 units, 30% 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 unit computations, 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
Started and completed in January
Transferred to finished goods in January
Inventory in process, January 31
Total units to be assigned cost
Cost Information
Cost per equivalent unit:
		Direct Materials	Conversion
Total costs for January in Cutting 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 Cutting 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 Cutting Department

b. Compute and evaluate the change in the costs 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
Change in conversion cost per equivalent unit

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	14600
Received from Weaving Department	224800
Total units accounted for by the Cutting Department	239400
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials (1)	Conversion (1)
Inventory in process, January 1	14600	0	3650
Started and completed in January	212800	212800	212800
Transferred to finished goods in January	227400	212800	216450
Inventory in process, January 31	12000	12000	3600
Total units to be assigned costs	239400	224800	220050
Cost Information
Costs per equivalent unit:
	Direct Materials	Conversion
Total costs for January in Cutting Department	$2,146,840.00	$924,210.00
Total equivalent units	224800	220050
Cost per equivalent unit (2)	$9.55	$4.20
Costs assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, January 1	$137,240.00	$44,895.00	$182,135.00
Costs incurred in January	$2,146,840.00	$924,210.00	$3,071,050.00
Total costs accounted for by the Cutting Department	$2,284,080.00	$969,105.00	$3,253,185.00
Costs allocated to completed and partially completed units:
Inventory in process, January 1 balance	$137,240.00	$44,895.00	$182,135.00
To complete inventory in process, January 1	$0.00	$15,330.00	$15,330.00
Cost of completed January 1 work in process	$137,240.00	$60,225.00	$197,465.00
Started and completed in January	$2,032,240.00	$893,760.00	$2,926,000.00
Transferred to finished goods in Janaury (3)	$2,169,480.00	$953,985.00	$3,123,465.00
Inventory in process, January 31 (4)	$114,600.00	$15,120.00	$129,720.00
Total costs assigned by the Cutting Department	$2,284,080.00	$969,105.00	$3,253,185.00

Solution b:

Particulars	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit ($9.55 - $9.40)	Increase	$0.15
Change in conversion cost per equivalent unit ($4.20 - $4.10)	Increase	$0.10