Question

Equivalent Units and Related Costs; Cost of Production Report; Entries

Dover Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling departments, emerging as finished chemicals.

The balance in the account Work in Process—Filling was as follows on January 1:

Work in Process—Filling Department
(5,500 units, 30% completed):
	Direct materials (5,500 x $12.3)	$67,650
	Conversion (5,500 x 30% x $8)	13,200
		$80,850

The following costs were charged to Work in Process—Filling during January:

Direct materials transferred from Reaction
	Department: 71,000 units at $12.1 a unit	$859,100
Direct labor		295,170
Factory overhead		283,586

During January, 70,400 units of specialty chemicals were completed. Work in Process—Filling Department on January 31 was 6,100 units, 30% completed.

Required:

1. Prepare a cost of production report for the Filling Department for January. If an amount is zero, enter "0". If required, round your cost per equivalent unit answers to two decimal places.

Dover Chemical Company
Cost of Production Report-Filling Department
For the Month Ended January 31
Unit Information
Units charged to production:
Inventory in process, January 1
Received from Reaction Department
Total units accounted for by the Filling 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 costs
Cost Information
Cost per equivalent unit:
		Direct Materials	Conversion
Total costs for January in Filling 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 Filling 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 Filling Department			$

Feedback

1. Calculate equivalent units for materials and conversion costs. Calculate the cost per equivalent unit for materials and conversion costs. Calculate the costs assigned to the beginning inventory, the units started and completed, and the ending inventory.

2. Journalize the entries for (1) costs transferred from Reaction to Filling and (2) the cost transferred from Filling to Finished Goods.

(1)	Work in Process-Filling Department
	Work in Process-Reaction Department
(2)	Finished Goods
	Work in Process-Filling Department

3. Determine the increase or decrease in the cost per equivalent unit from December to January for direct materials and conversion costs. If required, round your answers to two decimal places.

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

4. Discuss the uses of the cost of production report and the results of part (3).

The cost of production report may be used as the basis for allocating product costs between Work in Process and Finished Goods . The report can also be used to control costs by holding each department head responsible for the units entering production and the costs incurred in the department. Any differences in unit product costs from one month to another, such as those in part (3), can be studied carefully and any significant differences investigated.

Answer 1

Cost of Production report
Units charged to production:
Inventory in process at beginning				5500
Received from Reaction deptt				71000
Total units accounted				76500
			Whole Units	Material	Conversion
Inventory in Beginning			5500	0	3850
Started and completed			64900	64900	64900
Transferred to FG			70400	64900	68750
Inventory in end			6100	6100	1830
Total Units to be assigned cost			76500	71000	70580
Cost per Equivalent units				Material	Conversion
Total cost in Filling deptt				859100	578756
Total Equivalent units				71000	70580
Cost per Equivalent unit				12.1	8.2
Cost assigned to production:
			Material	Conversion	Total
Inventory in beginning			67650	13200	80850
Cost incurred in Jan			859,100	578756	1,437,856
Total cost accounted			926750	591956	1518706
Cost allocated to completed and partially completed units:
Inventory in beginning					80850
To complete inventory in process			0	31570	31570
Cost of completed Jan1 WIP					112420
Started and completed in Jan			785290	532180	1317470
Transferred to FG					1429890
Inventory in process Ending			73810	15006	88816
Total cost assigned					1518706
Req 2.
Journal entries:
1	Work in process- Filling deptt Dr.			859100
	Work in process-Reaction deptt				859100
2	Finished Goods inventory Dr.			1429890
	Work in process-Filling deptt				1429890
Req 3.				Inc/Dec	Amount
Change in material cost per unit				Decrease	0.2
Change in conversion cost per unit				Increase	0.2