Question

Cost of Production Report

The debits to Work in Process—Roasting Department for Morning Brew Coffee Company for August, together with information concerning production, are as follows:

Work in process, August 1, 1,000 pounds, 40% completed				$3,140*
	*Direct materials (1,000 X $2.7)	$2,700
	Conversion (1,000 X 40% X $1.1)	$440
		$3,140
Coffee beans added during August, 31,000 pounds				82,150
Conversion costs during August				36,576
Work in process, August 31, 1,600 pounds, 30% completed				?
Goods finished during August, 30,400 pounds				?

All direct materials are placed in process at the beginning of production.

a. Prepare a cost of production report, presenting the following computations:

1. Direct materials and conversion equivalent units of production for August
2. Direct materials and conversion costs per equivalent unit for August
3. Cost of goods finished during August
4. Cost of work in process at August 31

If an amount is zero, enter in "0". For the cost per equivalent unit, round your answer to two decimal places.

Morning Brew Coffee Company
Cost of Production Report-Roasting Department
For the Month Ended August 31
Unit Information
Units charged to production:
Inventory in process, August 1
Received from materials storeroom
Total units accounted for by the Roasting Department
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials (1)	Conversion (1)
Inventory in process, August 1
Started and completed in August
Transferred to finished goods in August
Inventory in process, August 31
Total units to be assigned costs
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for August in Roasting Department		$	$
Total equivalent units
Cost per equivalent unit (2)		$	$
Costs assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, August 1			$
Costs incurred in August
Total costs accounted for by the Roasting Department			$
Costs allocated to completed and partially completed units:
Inventory in process, August 1 balance			$
To complete inventory in process, August 1	$	$
Cost of completed August 1 work in process			$
Started and completed in August
Transferred to finished goods in August (3)			$
Inventory in process, August 31 (4)
Total costs assigned by the Roasting Department			$

b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (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

Solution a:

Morning Brew Coffee Company
Cost of Production Report-Roasting Department
For the Month Ended August 31
Unit Information
Units charged to production:
Inventory in process, August 1			1000
Received from materials storeroom			31000
Total units accounted for by the Roasting Department			32000
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials (1)	Conversion (1)
Inventory in process, August 1	1000	0	600
Started and completed in August	29400	29400	29400
Transferred to finished goods in August	30400	29400	30000
Inventory in process, August 31	1600	1600	480
Total units to be assigned costs	32000	31000	30480
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for August in Roasting Department		$82,150.00	$36,576.00
Total equivalent units		31000	30480
Cost per equivalent unit (2)		$2.65	$1.20
Costs assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, August 1	$2,700.00	$440.00	$3,140.00
Costs incurred in August	$82,150.00	$36,576.00	$118,726.00
Total costs accounted for by the Roasting Department	$84,850.00	$37,016.00	$121,866.00
Costs allocated to completed and partially completed units:
Inventory in process, August 1 balance	$2,700.00	$440.00	$3,140.00
To complete inventory in process, August 1	$0.00	$720.00	$720.00
Cost of completed August 1 work in process	$2,700.00	$1,160.00	$3,860.00
Started and completed in August	$77,910.00	$35,280.00	$113,190.00
Transferred to finished goods in August (3)	$80,610.00	$36,440.00	$117,050.00
Inventory in process, August 31 (4)	$4,240.00	$576.00	$4,816.00
Total costs assigned by the Roasting Department	$84,850.00	$37,016.00	$121,866.00

Solution b:

Particulars	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Decrease	$0.05
Change in conversion cost per equivalent unit	Increase	$0.10