# Equivalent units and related costs; cost of production report; entries 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 paw through die 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 (3,400 units, 60% completed): Direct materials (3,400 × $9.58)$32,572 Conversion (3,400 x 60% × $3.90) 7,956$40,528 The following costs were charged to Work in Process—Filling during January: Direct materials transferred from Reaction Department: 52,300 units at $950 a unit$496,850 Direct labor 101,560 Factory overhead 95,166 During January, 53,000 units of specialty chemicals were completed. Work in Process—Filling Department on January- 31 was 2,700 units, 30% completed. Instructions 1. Prepare a cost of production report for the Filling Department for January. 2. Journalize die entries for costs transferred from Reaction to Filling and the costs transferred from Filling to Finished Goods. 3. Determine the increase or decrease in the cost per equivalent unit from December to January for direct materials and conversion costs. 4. Discuss the uses of the cost of production report and the results of part (3).

### Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207

Chapter
Section

### Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207
Chapter 17, Problem 17.3BPR
Textbook Problem
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## Equivalent units and related costs; cost of production report; entriesDover 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 paw through die 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 (3,400 units, 60% completed): Direct materials (3,400 × $9.58)$32,572 Conversion (3,400 x 60% × $3.90) 7,956$40,528 The following costs were charged to Work in Process—Filling during January: Direct materials transferred from Reaction Department: 52,300 units at $950 a unit$496,850 Direct labor 101,560 Factory overhead 95,166 During January, 53,000 units of specialty chemicals were completed. Work in Process—Filling Department on January- 31 was 2,700 units, 30% completed.Instructions1. Prepare a cost of production report for the Filling Department for January.2. Journalize die entries for costs transferred from Reaction to Filling and the costs transferred from Filling to Finished Goods.3. Determine the increase or decrease in the cost per equivalent unit from December to January for direct materials and conversion costs.4. Discuss the uses of the cost of production report and the results of part (3).

(1)

To determine

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 July for Company DC.

### Explanation of Solution

Equivalent units for production is calculated by adding  units of opening work in process inventory, transferred to finished goods in July, and units for ending work in process inventory...

(2)

To determine

To Prepare: The journal entry to record cost transferred from reaction department to filling department and cost transferred from filling department to finished goods  during the month of January.

(3)

To determine
Increase or decrease in the cost per equivalent per unit for direct materials and conversion cost between December and January.

(4)

To determine

To Discuss: The uses of cost of production report.

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