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 pass through the 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 (1,900 units, 30% completed): Direct materials (1,900 x $12.40) $23,560 Conversion (1,900 x 30% x $8.00) 4,560 $28,120 The following costs were charged to Work in Process—Filling during January: Direct materials transferred from Reaction Department: 24,500 units at $12.10 a unit $296,450 Direct labor 105,260 Factory overhead 101,128 During January, 24,300 units of specialty chemicals were completed. Work in Process—Filling Department on January 31 was 2,100 units, 40% completed. Required: 1. Prepare a cost of production report for the Filling Department for January. If an amount is zero, enter "0". If required, round your cost per equivalent unit answers to two decimal places. 2. Journalize the entries for (1) costs transferred from Reaction to Filling and (2) 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. If required, round your answers to two decimal places.
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.
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 pass through the 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 | ||
| (1,900 units, 30% completed): | ||
| Direct materials (1,900 x $12.40) | $23,560 | |
| Conversion (1,900 x 30% x $8.00) | 4,560 | |
| $28,120 |
The following costs were charged to Work in Process—Filling during January:
| Direct materials transferred from Reaction | ||
| Department: 24,500 units at $12.10 a unit | $296,450 | |
| Direct labor | 105,260 | |
| Factory |
101,128 |
During January, 24,300 units of specialty chemicals were completed. Work in Process—Filling Department on January 31 was 2,100 units, 40% completed.
Required:
1. Prepare a cost of production report for the Filling Department for January. If an amount is zero, enter "0". If required, round your cost per equivalent unit answers to two decimal places.
2.
3. Determine the increase or decrease in the cost per equivalent unit from December to January for direct materials and conversion costs. If required, round your answers to two decimal places.
4. The cost of production report may be used as the basis for allocating product costs between _________ and ____________ . The report can also be used to control costs by holding each department head responsible for the units entering production and the costs incurred in the department. Any differences in unit product costs from one month to another, such as those in part (3), can be studied carefully and any significant differences investigated.
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