Lui 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 March 31:
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.
Cost of Production Report
Lui 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 March 31:
ACCOUNT ACCOUNT NO.
| Date | Item | Debit | Credit | Balance Debit |
Balance Credit |
|---|---|---|---|---|---|
| March 1 | Bal., 4,600 units, 1/5 completed | 12,236 | |||
| 31 | Direct materials, 207,000 units | 538,200 | 550,436 | ||
| 31 | Direct labor | 117,000 | 667,436 | ||
| 31 | Factory |
29,188 | 696,624 | ||
| 31 | Goods transferred, 207,000 units | ? | |||
| 31 | Bal., ? units, 3/5 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 "0". When computing cost per equivalent units, round to the nearest cent.
| Units | Whole Units | Equivalent Units Direct Materials |
Equivalent Units Conversion |
|---|---|---|---|
| Units charged to production: | |||
| Inventory in process, March 1 | fill in the blank 1 | ||
| Received from materials storeroom | fill in the blank 2 | ||
| Total units accounted for by the Roasting Department | fill in the blank 3 | ||
| Units to be assigned costs: | |||
| Inventory in process, March 1 | fill in the blank 4 | fill in the blank 5 | fill in the blank 6 |
| Started and completed in March | fill in the blank 7 | fill in the blank 8 | fill in the blank 9 |
| Transferred to Packing Department in March | fill in the blank 10 | fill in the blank 11 | fill in the blank 12 |
| Inventory in process, March 31 | fill in the blank 13 | fill in the blank 14 | fill in the blank 15 |
| Total units to be assigned costs | fill in the blank 16 | fill in the blank 17 | fill in the blank 18 |
| Costs | Direct Materials | Conversion | Total |
|---|---|---|---|
| Cost per equivalent unit: | |||
| Total costs for March in Roasting Department | $fill in the blank 19 | $fill in the blank 20 | |
| Total equivalent units | fill in the blank 21 | fill in the blank 22 | |
| Cost per equivalent unit | $fill in the blank 23 | $fill in the blank 24 | |
| Costs assigned to production: | |||
| Inventory in process, March 1 | $fill in the blank 25 | ||
| Costs incurred in March | fill in the blank 26 | ||
| Total costs accounted for by the Roasting Department | $fill in the blank 27 | ||
| Costs allocated to completed and partially completed units: | |||
| Inventory in process, March 1 balance | $fill in the blank 28 | ||
| To complete inventory in process, March 1 | $fill in the blank 29 | $fill in the blank 30 | fill in the blank 31 |
| Cost of completed March 1 work in process | $fill in the blank 32 | ||
| Started and completed in March | fill in the blank 33 | fill in the blank 34 | fill in the blank 35 |
| Transferred to finished goods in March | $fill in the blank 36 | ||
| Inventory in process, March 31 | fill in the blank 37 | fill in the blank 38 | fill in the blank 39 |
| Total costs assigned by the Roasting Department | $fill in the blank 40 |
2. Assuming that the March 1 work in process inventory includes $11,500 of direct materials, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between February and March. If required, round your answers to two decimal places.
| Line Item Description | Increase or Decrease | Amount |
|---|---|---|
| Change in direct materials cost per equivalent unit |
|
$fill in the blank 42 |
| Change in conversion cost per equivalent unit |
|
$fill in the blank 44 |
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