Question

Cost of Production Report Arabica Highland 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., 6,500 units, 1/5 completed 13,780 31 Direct materials, 260,000 units 546,000 559,780 31 Direct labor 104,300 664,080 31 Factory overhead 26,100 690,180 31 Goods transferred, 261,000 units ? 31 Bal., ? units, 1/5 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. Arabica Highland 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 Costs per equivalent unit: Direct Materials Conversion Total costs for July in Roasting Department $ $ Total equivalent units Cost per equivalent unit $ $ Costs charged to production: Direct Materials Conversion Total Inventory in process, July 1 $ Costs incurred in July Total costs accounted for by the Roasting Department $ Cost 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 Packing 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 $13,000 of direct materials, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between June 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

Arabica Highland 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			6500
Received from materials storeroom			260000
Total units accounted for by the Roasting Department			266500
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, July 1	6500	0	5200
Started and completed in July	254500	254500	254500
Transferred to Packing Department in July	261000	254500	259700
Inventory in process, July 31	5500	5500	1100
Total units to be assigned costs	266500	260000	260800
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for July in Roasting Department		546000	130400
Total equivalent units		260000	260800
Cost per equivalent unit		2.10	0.50
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, July 1			13780
Costs incurred in July			676400
Total costs accounted for by the Roasting Department			690180
Cost allocated to completed and partially completed units:
Inventory in process, July 1 balance			13780
To complete inventory in process, July 1	0	2600	2600
Cost of completed July 1 work in process			16380
Started and completed in July	534450	127250	661700
Transferred to Packing Department in July			678080
Inventory in process, July 31	11550	550	12100
Total costs assigned by the Roasting Department			690180
2
	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Increase	0.10	=2.1-(13000/6500)
Change in conversion cost per equivalent unit	Decrease	0.10	=((13780-6500*2)/(6500*1/5))-0.5