White Diamond Flour Company manufactures flour by a series of three processes, beginning with wheat grain...

The balance in the account Work in Process-Sifting Department was as follows on July 1:

Work in Process-Sifting Department
(900 units, 3/5 completed):
Direct materials (900 × $2.05)	$1,845
Conversion (900 × 3/5 × $0.40)	216
	$2,061

The following costs were charged to Work in Process-Sifting Department during July:

Direct materials transferred from Milling Department:
15,700 units at $2.15 a unit	$33,755
Direct labor	4,420
Factory overhead	2,708

During July, 15,500 units of flour were completed. Work in Process-Sifting Department on July 31 was 1,100 units, 4/5 completed.

	Required:
1.	Journalize the entries for costs transferred from Milling to Sifting and the costs transferred from Sifting to Packaging. Refer to the Chart of Accounts for correct wording of account titles. Use the date July 31 for all journal entries.
2.	Determine the increase or decrease in the cost per equivalent unit from June to July for direct materials and conversion costs. Round your answers to the nearest cent.

Solutions

Expert Solution

July 31st	DR	Work-in progress - Sifting	$40,883
	CR	Direct material	$33,755
	CR	Direcct labour	$4,420
	CR	factory overhead	$2,708
		Cost of material,labour and factory overhead of 15700 units tranfered to workin progress

July 31 st
	DR	Work-in progress - Sifting	$5,168
	CR	Conversion cost	$5,168
		Conversion cost of opening stock and july month (i.e 360.4= $144 and {15700(4/5)*.4=5024)
July 31 st
	DR	Work-in progress - packing	$46,051
	CR	Work- in progress- Sifting	$46,051
		Total conversion cost for the sifting process trnafered to packing

Determination of Increasing or decreasing of cost per equivalent unit from june to july

in the month of JUNE only 540 units procdued from sifting process with the cost of $2061. Hence cost per unit is $3.816

Whereas during the month of JULY 15500 units processed with $46051. that means cost per unit is $2.97.

we can say there is decreasing in the cost per equivalent unit from june to july.

ekkarill92 answered 1 year ago

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