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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 1,700 pounds, 20% completed $ 3,479* "Direct materials (700×$4.70} $3,290 Conversion (700 × 20% × $ 1.35} 189 $3,479 Coffee beans added during August, 14,300 pounds 65,780 Conversion costs during August 21,942 Work in process, August 31,400 pounds. 42% completed ? Goods finished during August 14,600 pounds ? All direct materials arc 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 B. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (July).
Financial & Managerial Accounting
Solutions
Financial & Managerial Accounting
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 1,700 pounds, 20% completed | $ 3,479* | |
| "Direct materials (700×$4.70} | $3,290 | |
| Conversion (700 × 20% × $ 1.35} | 189 | |
| $3,479 | ||
| Coffee beans added during August, 14,300 pounds | 65,780 | |
| Conversion costs during August | 21,942 | |
| Work in process, August 31,400 pounds. 42% completed | ? | |
| Goods finished during August 14,600 pounds | ? |
All direct materials arc 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
B. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (July).
(A) (1)
Process costs
It is a method of cost accounting, which is used where the production is continuous, and the product needs various processes to complete. This method is used to ascertain the cost of the product at each process or stage of production.
Equivalents units for production
The activity of a processing department in terms of fully completed units is known as equivalent units. It includes the completed units of direct materials and conversion cost of beginning work in process, units completed and transferred out, and ending work in process.
Production cost report
A production cost report is a comprehensive report prepared for each department separately at the end of a particular period, which represents the physical flow and cost flow of product for the concerned department.
To Determine: The equivalents units for production of direct materials and conversion costs for the month of August for Company MBC.
Explanation of Solution
Equivalent units for production is calculated by adding units of opening work in process inventory, transferred to finished goods in august, and units for ending work in process inventory...
(B)
To Compute: The change in cost per equivalent unit for direct material and conversion cost comparing with July month.
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