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., 7,700 units, 3/5 completed 18,172 31 Direct materials, 308,000 units 646,800 664,972 31 Direct labor 122,300 787,272 31 Factory overhead 30,560 817,832 31 Goods transferred, 309,000 units ? 31 Bal., ? units, 1/5 completed ? Required:
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., 7,700 units, 3/5 completed | 18,172 | |||||
| 31 | Direct materials, 308,000 units | 646,800 | 664,972 | |||||
| 31 | Direct labor | 122,300 | 787,272 | |||||
| 31 | Factory |
30,560 | 817,832 | |||||
| 31 | Goods transferred, 309,000 units | ? | ||||||
| 31 | Bal., ? units, 1/5 completed | ? |
Required:
Question Content Area
1. Prepare a cost of production report, and identify the missing amounts for Work in Process—Roasting Department. If an amount is zero, enter "0". When computing cost per equivalent units, round to two decimal places.
Preparation of cost of production report of Arabica Highland Coffee Company for the month ended July 31
Unit Information
| Particulars | Amount |
|
Units Charged to production : |
|
| Inventory in process, July 1 | 7,700 |
| Received from material storeroom | 308,000 |
| Total units accounted for by the roasting deportment | 315,700 |
Units to be assigned costs:
| Particulars | Equivalent Units | ||
| Whole Units | Direct Materials | Conversion | |
| (A) Inventory in process, July 1 | 7,700 | 0 | 3,080(7,700*2/5) |
| (B) Started and completed in July (309,000-7,700) | 301,300 | 301,300 | 301,300 |
| (C) Transferred to Packing Department in July (A+B) | 309,000 | 301,300 | 304,380 |
| (D) Inventory in process, July 31 (315,700-309,000) | 6,700 | 6,700 | 1,340(6,700*1/5) |
| (E) Total units to be assigned costs (C+D) | 315,700 | 308,000 | 305,720 |
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