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, 14,200 units, 60% completed		$175,228*
*Direct materials (14,200 × $9.4)	$133,480
Conversion (14,200 × 60% × $4.9)	41,748
	$175,228
Materials added during January from Weaving Department, 218,800 units		$2,078,600
Direct labor for January		488,115
Factory overhead for January		596,585
Goods finished during January (includes goods in process, January 1), 221,400 units		—
Work in process, January 31, 11,600 units, 35% 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
Costs 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			$

Feedback

a. How much more (percentage amount) needed to be done to the beginning work in process units to make the units to complete to transfer to the next department? Did these units require more material cost or more conversion cost? How much, in terms of cost, had been done to these units in the prior period? In order for units to be transferred to the next department, the units have to be complete with respect to both materials and conversion. When are materials added in the process? How complete are the units in ending inventory with respect to materials? How compete are the units in ending inventory with respect to conversion? Materials and conversion cost needs to be allocated among the equivalent units. Are the number of equivalent units the same for materials and conversion?

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	$

Feedback

Answer 1

Cost of Production Report-Cutting Department
For the Month Ended January 31
Unit Information
Units charged to production:
Inventory in process, January 1			14200
Received from Weaving Department			218800
Total units accounted for by the Cutting Department			233000
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, January 1	14200	0	5680
Started and completed in January	207200	207200	207200
Transferred to Packing Department in January	221400	207200	212880
Inventory in process, January 31	11600	11600	4060
Total units to be assigned costs	233000	218800	216940
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for January in Cutting Department		2078600	1084700
Total equivalent units		218800	216940
Cost per equivalent unit		9.5	5
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, January 1			175228
Costs incurred in January			3163300
Total costs accounted for by the Cutting Department			3338528
Cost allocated to completed and partially completed units:
Inventory in process, January 1 balance			175228
To complete inventory in process, January 1	0	28400	28400
Cost of completed January 1 work in process			203628
Started and completed in January	1968400	1036000	3004400
Transferred to finished goods in January			3208028
Inventory in process, January 31	110200	20300	130500
Total costs assigned by the Cutting Department			3338528
2
	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Increase	0.1
Change in conversion cost per equivalent unit	Increase	0.1