Question

Conversion cost per equivalent unit, $5.10 EX 3-17 Cost of production report Obj. 2,4 The Cutting Department of Karachi Carpet Company provides the following data for January. Assume that all materials are added at the beginning of the process. $ 22,960* Work in process, January 1, 1,400 units, 75% completed *Direct materials (1,400 x $12.65) Conversion (1,400 x 75% x $5.00) $ 17,710 5,250 $22,960 Materials added during January from Weaving Department, 58,000 units Direct labor for January Factory overhead for January Goods finished during January (includes goods in process, January 1), 56,200 units Work in process, January 31, 3,200 units, 30% completed $742,400 134,550 151,611 A. Prepare a cost of production report for the Cutting Department. B. Compute and evaluate the change in the costs per equivalent unit for direct materials and conversion from the previous month (December).

Answer 1

A)

Karachi Carpet Company
Cost of Production Report—Cutting Department
For the Month Ended January
Unit Information
Units charged to production:
Inventory in process, January 1			1400
Received from Weaving Department			58000
Total units accounted for by the Cutting Department			59400
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, January	1400	0	350
Started and completed in January	54800	54800	54800
Transferred to finished goods in January	56200
Inventory in process, January	3200	3200	3200
Total units to be assigned costs		58000	56110
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for January in Cutting Department		$742,400	$286,161
Total equivalent units		58000	56110
Cost per equivalent unit		$12.80	$5.10
	Direct Materials	Conversion	Total
Inventory in process, January 1	$17,710	$5,250	$22,960
Costs incurred in January	$742,400	$286,161	$1,028,561
Total costs accounted for by the Cutting Department			$1,051,521
Cost allocated to completed and partially completed units:
Inventory in process, January 1 balance	$17,710	$5,250	$22,960
To complete inventory in process, January 1	$0	$1,785	$1,785
Cost of completed January 1 work in process	$17,710	$7,035	$24,745
Started and completed in January	$701,440	$279,480	$980,920
Transferred to finished goods in January			$1,005,665
Inventory in process, January 31	40960	4896	4586
Total costs assigned by the Cutting Department			$1,051,521

_____________________________________________________________________________

B)

	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Increase	$0.15
Change in conversion cost per equivalent unit	Increase	$0.10