BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

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 are 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)

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 August for Company MBC.

Explanation

Calculate the equivalents units for production of direct materials and conversion costs for the month of August for Company MBC as shown below:

Figure (1)

Working notes:

Calculate opening work in process inventory for conversion costs as shown below:

Opening work in process inventory for conversion costs) = 120%=80%

Calculate units started and completed in August as shown below:

Units started and completed in August = (Units received from material storeroom Ending work in process inventory)=14,300units 

(a-2)

To determine
The direct materials and conversion cost equivalent cost per unit for August.

(a-3)

To determine
The cost of goods finished during the month of august.

(a-4)

To determine
The cost of ending work in process inventory during the month of August.

(b)

To determine

To Compute: The change in cost per equivalent unit for direct material and conversion cost comparing with July month.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What is the role of accounting in business?

Corporate Financial Accounting

What is the purpose of the Americans with Disabilities Act?

Foundations of Business (MindTap Course List)

What are some pros and cons of holding high levels of current assets in relation to sales? Use the DuPont equat...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

What, in your own words, does BR entail?

Pkg Acc Infor Systems MS VISIO CD

Explain the difference between partial and total measures of productivity.

Cornerstones of Cost Management (Cornerstones Series)