Arabica Highland Coffee Company roasts and packs coffee beans. The process begins by placing coffee beans into the Roasting Department. From the Roasting Department, coffee beans are then transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at July 31: ACCOUNT Work in Process—Roasting Department ACCOUNT NO. Date Item Debit Credit Balance Debit Credit July. 1 Bal., 30,000 units, 10% completed 121,800 31 Direct materials, 155,000 units 620,000 741,800 31 Direct labor 90,000 831,800 31 Factory overhead 33,272 865,072 31 Goods transferred, 149,000 units ? 31 Bal., ? units, 45% completed ? Required: 1. Prepare a cost of production report and identify the missing amounts for Work in Process—Roasting Department. If an amount is zero, enter in a zero "0". When computing cost per equivalent units, round to the nearest cent. Arabica Highland Coffee Company Cost of Production Report-Roasting Department For the Month Ended July 31 Unit Information Units charged to production: Inventory in process, July 1 Received from materials storeroom Total units accounted for by the Roasting Department Units to be assigned costs: Equivalent Units Whole Units Direct Materials Conversion Inventory in process, July 1 Started and completed in July Transferred to Packing Department in July Inventory in process, July 31 Total units to be assigned costs Cost Information Costs per equivalent unit: Direct Materials Conversion Total costs for July in Roasting Department $ $ Total equivalent units Cost per equivalent unit $ $ Costs charged to production: Direct Materials Conversion Total Inventory in process, July 1 $ Costs incurred in July Total costs accounted for by the Roasting Department $ Cost allocated to completed and partially completed units: Inventory in process, July 1 balance $ To complete inventory in process, July 1 $ $ Cost of completed July 1 work in process $ Started and completed in July Transferred to Packing Department in July $ Inventory in process, July 31 Total costs assigned by the Roasting Department $ Feedback 1. Calculate equivalent units for materials and conversion costs. Calculate the cost per equivalent unit for materials and conversion costs. Calculate the costs assigned to the beginning inventory, the units started and completed, and the ending inventory. 2. Assuming that the July 1 work in process inventory includes $119,400 of direct materials, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between June and July. 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.
Arabica Highland Coffee Company roasts and packs coffee beans. The process begins by placing coffee beans into the Roasting Department. From the Roasting Department, coffee beans are then transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at July 31:
| ACCOUNT Work in Process—Roasting Department | ACCOUNT NO. | |||||||
| Date | Item | Debit | Credit | Balance | ||||
| Debit | Credit | |||||||
| July. | 1 | Bal., 30,000 units, 10% completed | 121,800 | |||||
| 31 | Direct materials, 155,000 units | 620,000 | 741,800 | |||||
| 31 | Direct labor | 90,000 | 831,800 | |||||
| 31 | Factory |
33,272 | 865,072 | |||||
| 31 | Goods transferred, 149,000 units | ? | ||||||
| 31 | Bal., ? units, 45% completed | ? |
Required:
1. Prepare a cost of production report and identify the missing amounts for Work in Process—Roasting Department. If an amount is zero, enter in a zero "0". When computing cost per equivalent units, round to the nearest cent.
| Arabica Highland Coffee Company | |||
| Cost of Production Report-Roasting Department | |||
| For the Month Ended July 31 | |||
| Unit Information | |||
| Units charged to production: | |||
| Inventory in process, July 1 | |||
| Received from materials storeroom | |||
| Total units accounted for by the Roasting Department | |||
| Units to be assigned costs: | |||
| Equivalent Units | |||
| Whole Units | Direct Materials | Conversion | |
| Inventory in process, July 1 | |||
| Started and completed in July | |||
| Transferred to Packing Department in July | |||
| Inventory in process, July 31 | |||
| Total units to be assigned costs | |||
| Cost Information | |||
| Costs per equivalent unit: | |||
| Direct Materials | Conversion | ||
| Total costs for July in Roasting Department | $ | $ | |
| Total equivalent units | |||
| Cost per equivalent unit | $ | $ | |
| Costs charged to production: | |||
| Direct Materials | Conversion | Total | |
| Inventory in process, July 1 | $ | ||
| Costs incurred in July | |||
| Total costs accounted for by the Roasting Department | $ | ||
| Cost allocated to completed and partially completed units: | |||
| Inventory in process, July 1 balance | $ | ||
| To complete inventory in process, July 1 | $ | $ | |
| Cost of completed July 1 work in process | $ | ||
| Started and completed in July | |||
| Transferred to Packing Department in July | $ | ||
| Inventory in process, July 31 | |||
| Total costs assigned by the Roasting Department | $ |
1. Calculate equivalent units for materials and conversion costs. Calculate the cost per equivalent unit for materials and conversion costs. Calculate the costs assigned to the beginning inventory, the units started and completed, and the ending inventory.
2. Assuming that the July 1 work in process inventory includes $119,400 of direct materials, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between June and July. 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 |
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