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: $2,952* Work in process, August 1, 800 pounds, 30% completed *Direct materials (800 X $3.3) Conversion (800 X 30% X $1.3) $2,640 $312 $2,952 Coffee beans added during August, 25,000 pounds 81,250 Conversion costs during August 34,874 Work in process, August 31, 1,300 pounds, 50% completed Goods finished during August, 24,500 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

Answer 1

Morning Brew Coffee Company Cost of Production Report - Roasting Department For the Month Ended August 31 Unit Information Units charged to production: Inventory in proces, August 1 800 Received from materials storeroom 25,000 Total units accounted for by the Roasting department 25,800 Units to be assigned costs: Whole Units 800 Inventory in proces, August 1 Started and Completed in August Transferred to finished goods in August Inventory in proces, August 31 Total units to be assigned costs Equivalent Units Direct Conversion Materials 0 560 23,700 23,700 23,700 24,260 1,300 650 25,000 24,910 23,700 24,500 1,300 25,800 Cost Information Conversion Total cost for August in Roasting department Total Equivalent units Cost per equivalent unit Direct Materials $81,250 25,000 $3.25 $34,874 24,910 $1.40

Costs assigned to production: Direct Materials Conversion Total $2,952 $116,124 $119,076 Inventory in proces, August 1 Materials cost incurred in Roasting department in August Total costs accounted for by the Roasting department Costs allocated to completed and partially completed units: Inventory in proces, August 1 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 Inventory in proces, August 31 Total costs assigned by the Roasting department $0 $784 $77,025 $33,180 $2,952 $784 [560 units x $1.40] $3,736 $110,205 [Ref: Workings] $113,941 $5,135 [Ref: Workings] $119,076 $4,225 $910 Change in direct material cost per equivalent unit Change in conversion cost per equivalent unit Workings: Change Decrease Increase Amount $0.05 $0.10 [Ref: Workings] [Ref: Workings] Under FIFO method, equivalent units would consist efforts required to complete the beginning inventory, efforts put for completed and transferred out goods and ending inventory. As the materials are introduced at the beginning itself, beginning inventory is 100% complete in terms of materials, 0% efforts would be required in current process or period whereas conversion costs would require the uncompleted portion of costs in current process or period. That is, it was complete 30% already and so 70% efforts would be required in current period.

800 Units in beginning inventory Add: Materials added during the month Less: Units completed and transferred out Units in ending inventory 25,000 (24,500) --> Of which 800 units shall be from beg. inventory; Bal. 23700 units from current. 1,300 Particulars EUP- Materials Equivalent Units of Production (EUP) Whole Units Materials 800 23,700 100% 24,500 1,300 100% 25,800 Beginning work in process Started, Completed and transferred Transferred to next process Ending work in process Equivalent Units of Production (EUP) [800 units x 0%; 800 units x 70%] [23700 units x 100%; 23700 units x 100%] % EUP- Conversion Conversion 70% 560 100% 23,700 24,260 50% 650 24,910 23,700 23,700 1,300 25,000 [1300 units x 100%; 1300 units x 50%] NOTE: As all the materials are transferred in at the beginning of the process, ending work in process inventory shall consist of 100% of materials in for EUP calculation. Materials Conversion [Under FIFO method, it shall not be considered here] Cost per equivalent units of production Cost of beginning work in process Cost added during the month Total Materials Costs & Conversion Costs Equivalent units of Production (EUP) Cost per Equivalent units of Production Cost per EUP - Previous period Change in EUP between the periods $81,250 $81,250 25,000 $3.25 $3.30 -$0.05 Decrease $34,874 $34,874 24,910 $1.40 $1.30 $0.10 Increase [As computed EUP schedule presented above] [$81250 / 25000 units = $3.250; $34874/24910 units = $1.40] [Materials = $2640 / 800 units; Conversion = $312 / (800 x (1 - 70%)] [Materials = $3.250 - $3.30 = $-0.050; Conversion = $1.40 - $1.30 = -$-0.10]

Cost of goods completed & transferred EUP Cost per EUP Totals Materials - Beginning cost Conversion - Beginning Cost Cost of goods completed & trfd from beginning $2,640 $312 $2,952 [Given] [$2952 - $2640] 23,700 24,260 $3.25 $1.40 [23700 units x $3.250] [24260 units x $1.40] Materials - Current Cost Conversion - Current Cost Cost of goods completed & trfd from current Total Cost of goods completed & transferred $77,025 $33,964 $110,989 $113,941 [$2952 + $110989] Cost of ending work-in-process EUP Totals Cost per EUP $3.25 $1.40 Materials Conversion Total cost of ending work-in-process 1,300 650 $4,225 $910 $5,135 [1300 units x $3.250] [650 units x $1.40]