In: Accounting
White Diamond Flour Company manufactures flour by a series of three processes, beginning with wheat grain being introduced in the Milling Department. From the Milling Department, the materials pass through the Sifting and Packaging departments, emerging as packaged refined flour.
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. |
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.