# 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% &gt; × $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).

### Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

### Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

#### Solutions

Chapter
Section
Chapter 20, Problem 20.16EX
Textbook Problem

## Cost of production reportThe 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 August2. Direct materials and conversion costs per equivalent unit for August3. Cost of goods finished during August4. Cost of work in process at August 31b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (July).

Expert Solution

(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 of Solution

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

Expert Solution

(a-2)

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

Expert Solution

(a-3)

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

Expert Solution

(a-4)

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

Expert Solution

(b)

To determine

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

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