Question

Chapter 20 Exercises and Prot Calculator Print Item eBook Equivalent units and related costs; cost of production report; entries Instructions Chart of Accounts Cost of Production Report Journal Final Questions Instructions White Diamond Flour Company manufactures flour by a series of three processes, beginning with wheat grain being introduced i the Milling Department. From the Milling Department, the materials pass through the Sifting and Packaging departments, emerging as packaged refined flour. The balance in the account Work in Process-Sifting Department was as follows on July 1 Work Process-Sifting Department (700 units, 3/5 completed): Direct materials (700 x $2.35) $1,645 Conversion (700 x 3/5 x $0.30) 126 $1.771 The following costs were charged to Work in Process-Sifting Department during July: Direct materials transferred from Milling Department 15,700 units at $2.45 a unit $38,465 Direct labor 4,480 1,022 Factory overhead During July, 15,100 units of flour were completed. Work in Process-Sifting Department on July 31 was 1,300 units, j completed. Required: 1. Prepare a cost of production report for the Sifting Department for July. If required, round your cost per equivalent unit answers to two decimal places. If an amount is zero, enter zero 0". 2. Journalize the entries for costs transferred from Milling to Sifting and the costs transferred from Sifting to Packaging. Refer to the Chart of Accounts for correct wording of account titles. 3. Determine the increase or decrease in the cost per equivalent unit from June to July for direct two decimal places. materials and conversion costs. If required, round your answers 4. Discuss the uses of the cost of production report and the results of part (3). Chart of Accounts CHART OF ACCOUNTS White Diamond Flour Company General Ledger ASSETS REVENUE 410 Sales 110 Cash 610 Interest Revenue 121 Accounts Receivable 125 Notes Receivable 126 Interest Receivable EXPENSES 131 Materials 510 Cost of Goods Sold 141 Work in Process-Milling Department 520 Wages Expense 142 Work in Process-Sifting Department 531 Selling Expense 532 Insurance Expense 143 Work in Process-Packagi ng Department 151 Factory Overhead-Milling Department 533 Utilities Expense 152 Factory Overhead-Sifting Department 534 Supplies Expense 153 Factory Overhead-Packaging Department 540 Administrative Expense 161 Finished Goods 561 Depreciation Expense-Factory 590 Miscellaneous Expense 171 Supplies 172 Prepaid Insurance 173 Prepaid Expenses 710 Interest Expense 181 Land 191 Factory 192 Accumulated Depreciation-Factory LIABILITIES 210 Accounts Payable 221 Utilities Payable 231 Notes Payable 236 Interest Payable 251 Wages Payable EQUITY 311 Common Stock 340 Retained Earnings 351 Dividends Cost of Production Report 1. Prepare a cost of production report for the Sifting Department for July. If required, round your cost per equivalent unit answers to two decimal places. If an amount is zero, enter zero "O". WHITE DIAMOND FLOUR COMPANY Cost of Production Report-Sifting Department For the Month Ended July 31 Equivalent Units UNITS Whole Units Direct Materials Conversion Units charged to production: Inventory in process, July 1 Received from Milling Department Total units accounted for by the Sifting Department Units to be assigned costs: Inventory in process, July 1 (3/5 completed) Started and completed in July Transferred to Packaging Department in July Inventory in process, July 31 (4/5 completed) Total units to be assigned costs Costs COSTS Conversion Direct Materials Total Cost per equivalent unit $ $ Total costs for July in Sifting Department Total equivalent units $ $ Cost per equivalent unit Costs assigned to production: Inventory in process, July 1 Costs incurred in July Total costs accounted for by the Sifting 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 Packaging Department in July Inventory in process, July 31 Total costs assigned by the Sifting Department $ Journal 2. Journalize the entries for costs transferred from Milling to Sifting and the costs transferred from Sifting to Packaging. Refer to the Chart of Accounts for correct wording of account titles. PAGE 10 ACCOUNTING EQUATION JOURNAL DATE CREDIT DESCRIPTION DEBIT ASSETS LIABILITIESQUITY 2 Final Questions 3. Determine the increase or decrease in the cost per equivalent unit from June to July for direct materials and conversion costs. If required, round your answers to two decimal places. Direct materials: $ Conversion: 4. The cost of production report may be used as the basis for allocating product costs between and The report can also be used to control costs by holding each department head responsible for the units entering production and the costs incurred in the department. Any differences in unit product costs from one month to another, such as those in part (3), can be studied carefully and any significant differences investigated.

Answer 1

Cost of Production Report-Mixing Department
For the Month Ended July 31
UNITS	Whole Units	Equivalent Units
		Direct Materials	Conversion
Units charged to production:
Inventory in process, July 1	700	700	700
Received from Milling department	15,700	15,700	15,700
Total units accounted for by the Shifting Department	16,400	16,400	16,400
Units to be assigned costs:
Inventory in process, July 1 (3/5 completed)	700	0	280	(700*2/5)
Started and completed in July	14,400	14,400	14,400
Transferred to Packaing Department in March	15,100	14400	14680
Inventory in process, July 31 (4/5% completed)	1,300	1,300	1040	(1300*4/5)
Total units to be assigned costs	16,400	15700	15720
COSTS	Costs
	Direct Materials	Conversion	Total
Cost per equivalent unit:
Total costs for July in shifting Department	$38,465	$5,502	$43,967
Total equivalent units	15700	15720
Cost per equivalent unit	$2.45	$0.35	$2.80
Costs assigned to production:
Inventory in process, July 1	$1,645	$126	$1,771
Costs incurred in July	$38,465	$5,502	$43,967
Total costs accounted for by the Shifting Department	$40,110	$5,628	$45,738
Cost allocated to completed and
partially completed units:
Inventory in process, July 1 balance			$1,771
To complete inventory in process, July 1	$0.00	$98	98
Cost of completed March 1 work in process			$1,869
Started and completed in March	$35,280	$5,040	40,320
Transferred to Packaging Department in March	$35,280.00	$5,138.00	$42,189
Inventory in process, July 31	$3,185	$364	3,549
Total costs assigned by the Shifting Department	$38,465.00	$5,502.00	$45,738
ans 2	Dr	Cr
Work In process-Shifting Department	$38,465
Work In process-Milling Department		$38,465
Work In process-Milling Department	$42,189
Work In process-Packaging Department		$42,189
ans 3
Cost Analysis for	Beg bal	During July
	Cost per Unit	Cost per Unit	Increase/Decraese
Direct Materials in inventory in process,	2.35	$2.45	$0.10	Increase
Conversion costs in inventory in process,	0.3	$0.35	$0.05	Increase
ans 4
There is increase in cost per unit the reasons must be investigated