Dover Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling departments, emerging as finished chemicals. The balance in the account Work in Process—Filling was as follows on January 1: Work in Process—Filling Department (3,900 units, 80% completed): Direct materials (3,900 x $11.9) $46,410 Conversion (3,900 x 80% x $7.7) 24,024 $70,434 The following costs were charged to Work in Process—Filling during January: Direct materials transferred from Reaction Department: 50,300 units at $11.7 a unit $588,510 Direct labor 198,580 Factory overhead 190,787 During January, 49,900 units of specialty chemicals were completed. Work in Process—Filling Department on January 31 was 4,300 units, 30% completed. Required: 1. Prepare a cost of production report for the Filling Department for January. If an amount is zero, enter "0". If required, round your cost per equivalent unit answers to two decimal places. Dover Chemical Company Cost of Production Report-Filling Department For the Month Ended January 31 Unit Information Units charged to production: Inventory in process, January 1 Received from Reaction Department Total units accounted for by the Filling Department Units to be assigned costs: Equivalent Units Whole Units Direct Materials Conversion Inventory in process, January 1 Started and completed in January Transferred to finished goods in January Inventory in process, January 31 Total units to be assigned costs Cost Information Cost per equivalent unit: Direct Materials Conversion Total costs for January in Filling Department Total equivalent units Cost per equivalent unit Costs assigned to production: Direct Materials Conversion Total Inventory in process, January 1 Costs incurred in January Total costs accounted for by the Filling Department Costs allocated to completed and partially completed units: Inventory in process, January 1 balance To complete inventory in process, January 1 Cost of completed January 1 work in process Started and completed in January Transferred to finished goods in January Inventory in process, January 31 Total costs assigned by the Filling Department 2. Journalize the entries for (1) costs transferred from Reaction to Filling and (2) the cost transferred from Filling to Finished Goods. If an amount box does not require an entry, leave it blank. (1) (2) 3. Determine the increase or decrease in the cost per equivalent unit from December to January for direct materials and conversion costs. If required, round your answers to two decimal places. Increase or Decrease Amount Change in direct materials cost per equivalent unit Change in conversion cost per equivalent unit
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Dover Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling departments, emerging as finished chemicals.
The balance in the account Work in Process—Filling was as follows on January 1:
| Work in Process—Filling Department | ||
| (3,900 units, 80% completed): | ||
| Direct materials (3,900 x $11.9) | $46,410 | |
| Conversion (3,900 x 80% x $7.7) | 24,024 | |
| $70,434 |
The following costs were charged to Work in Process—Filling during January:
| Direct materials transferred from Reaction | ||
| Department: 50,300 units at $11.7 a unit | $588,510 | |
| Direct labor | 198,580 | |
| Factory overhead | 190,787 |
During January, 49,900 units of specialty chemicals were completed. Work in Process—Filling Department on January 31 was 4,300 units, 30% completed.
Required:
1. Prepare a cost of production report for the Filling Department for January. If an amount is zero, enter "0". If required, round your cost per equivalent unit answers to two decimal places.
| Dover Chemical Company | |||
| Cost of Production Report-Filling Department | |||
| For the Month Ended January 31 | |||
| Unit Information | |||
| Units charged to production: | |||
| Inventory in process, January 1 | |||
| Received from Reaction Department | |||
| Total units accounted for by the Filling Department | |||
| Units to be assigned costs: | |||
| Equivalent Units | |||
| Whole Units | Direct Materials | Conversion | |
| Inventory in process, January 1 | |||
| Started and completed in January | |||
| Transferred to finished goods in January | |||
| Inventory in process, January 31 | |||
| Total units to be assigned costs | |||
| Cost Information | |||
| Cost per equivalent unit: | |||
| Direct Materials | Conversion | ||
| Total costs for January in Filling Department | |||
| Total equivalent units | |||
| Cost per equivalent unit | |||
| Costs assigned to production: | |||
| Direct Materials | Conversion | Total | |
| Inventory in process, January 1 | |||
| Costs incurred in January | |||
| Total costs accounted for by the Filling Department | |||
| Costs allocated to completed and partially completed units: | |||
| Inventory in process, January 1 balance | |||
| To complete inventory in process, January 1 | |||
| Cost of completed January 1 work in process | |||
| Started and completed in January | |||
| Transferred to finished goods in January | |||
| Inventory in process, January 31 | |||
| Total costs assigned by the Filling Department |
2.
| (1) | |||
| (2) | |||
3. Determine the increase or decrease in the cost per equivalent unit from December to January for direct materials and conversion costs. If required, round your answers to two decimal places.
| Increase or Decrease | Amount | |
| Change in direct materials cost per equivalent unit | ||
| Change in conversion cost per equivalent unit |
4. Discuss the uses of the cost of production report and the results of part (3).
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.
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