Question

Hana Coffee Company roasts and packs coffee beans. The process begins by placing coffee beans into the Roasting Department. From the Roasting Department, coffee beans are then transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at July 31:

ACCOUNT Work in Process—Roasting Department							ACCOUNT NO.
Date		Item	Debit		Credit		Balance
							Debit		Credit
July	1	Bal., 5,600 units, 1/5 completed					11,872
	31	Direct materials, 252,000 units	529,200				541,072
	31	Direct labor	101,700				642,772
	31	Factory overhead	25,420				668,192
	31	Goods transferred, 252,000 units			?
	31	Bal., ? units, 3/5 completed					?

Required:

1. Prepare a cost of production report, and identify the missing amounts for Work in Process—Roasting Department. If an amount is zero, enter "0". When computing cost per equivalent units, round to two decimal places.

Hana Coffee Company
Cost of Production Report-Roasting Department
For the Month Ended July 31
Unit Information
Units charged to production:
Inventory in process, July 1
Received from materials storeroom
Total units accounted for by the Roasting Department
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, July 1
Started and completed in July
Transferred to Packing Department in July
Inventory in process, July 31
Total units to be assigned costs
Cost Information
Cost per equivalent unit:
		Direct Materials	Conversion
Total costs for July in Roasting Department		$	$
Total equivalent units
Cost per equivalent unit		$	$
Costs assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, July 1			$
Costs incurred in July
Total costs accounted for by the Roasting Department			$
Costs allocated to completed and partially completed units:
Inventory in process, July 1 balance			$
To complete inventory in process, July 1	$	$
Cost of completed July 1 work in process			$
Started and completed in July
Transferred to Molding Department in July			$
Inventory in process, July 31
Total costs assigned by the Roasting Department			$

2. Assuming that the July 1 work in process inventory includes $11,200 of direct materials, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between February and July. If required, round your answers to the nearest cent.

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

Answer 1

Hana Coffee Company
Cost of Production Report-Roasting Department
For the Month Ended July 31
Unit Information
Units charged to production:
Inventory in process, July 1			5600
Received from materials storeroom			252000
Total units accounted for by the Roasting Department			257600
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, July 1	5600	0	4480
Started and completed in July	246400	246400	246400
Transferred to Packing Department in July	252000	246400	250880
Inventory in process, July 31	5600	5600	3360
Total units to be assigned costs	257600	252000	254240
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for July in Roasting Department		529200	127120
Total equivalent units		252000	254240
Cost per equivalent unit		2.10	0.50
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, July 1			11872
Costs incurred in July			656320
Total costs accounted for by the Roasting Department			668192
Cost allocated to completed and partially completed units:
Inventory in process, July 1 balance			11872
To complete inventory in process, July 1	0	2240	2240
Cost of completed July 1 work in process			14112
Started and completed in July	517440	123200	640640
Transferred to Packing Department in July			654752
Inventory in process, July 31	11760	1680	13440
Total costs assigned by the Roasting Department			668192
2
	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Increase	0.10	=2.1-(11200/5600)
Change in conversion cost per equivalent unit	Decrease	0.10	=0.5-((11872-5600*2)/(5600*1/5))