The debits to Work in Process—Roasting Department for Morning Brew Coffee Company for August, together with information concerning production, are as follows: Line Item Description Amount Amount Work in process, August 1, 1,200 pounds, 20% completed $3,504* *Direct materials (1,200 × $2.70) $3,240 Conversion (1,200 × 20% × $1.10) 264 Total $3,504 Coffee beans added during August, 38,000 pounds 100,700 Conversion costs during August 45,072 Work in process, August 31, 2,000 pounds, 30% completed ? Goods finished during August, 37,200 pounds ? All direct materials are placed in process at the beginning of production. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet a. Prepare a cost of production report, presenting the following computations: Direct materials
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.
The debits to Work in Process—Roasting Department for Morning Brew Coffee Company for August, together with information concerning production, are as follows:
| Line Item Description | Amount | Amount |
|---|---|---|
| Work in process, August 1, 1,200 pounds, 20% completed | $3,504* | |
| *Direct materials (1,200 × $2.70) | $3,240 | |
| Conversion (1,200 × 20% × $1.10) | 264 | |
| Total | $3,504 | |
| Coffee beans added during August, 38,000 pounds | 100,700 | |
| Conversion costs during August | 45,072 | |
| Work in process, August 31, 2,000 pounds, 30% completed | ? | |
| Goods finished during August, 37,200 pounds | ? |
All direct materials are placed in process at the beginning of production.
This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.
a. Prepare a cost of production report, presenting the following computations:
- Direct materials and conversion equivalent units of production for August
- Direct materials and conversion costs per equivalent unit for August
- Cost of goods finished during August
- Cost of work in process at August 31
If an amount is zero, enter in "0". For the cost per equivalent unit, round your answer to the nearest cent.
| Units | Whole Units | Equivalent Units Direct Materials (1) |
Equivalent Units Conversion (1) |
|---|---|---|---|
| Units charged to production: | |||
| Inventory in process, August 1 | fill in the blank 2 | ||
| Received from materials storeroom | fill in the blank 3 | ||
| Total units accounted for by the Roasting Department | fill in the blank 4 | ||
| Units to be assigned costs: | |||
| Inventory in process, August 1 | fill in the blank 5 | fill in the blank 6 | fill in the blank 7 |
| Started and completed in August | fill in the blank 8 | fill in the blank 9 | fill in the blank 10 |
| Transferred to finished goods in August | fill in the blank 11 | fill in the blank 12 | fill in the blank 13 |
| Inventory in process, August 31 | fill in the blank 14 | fill in the blank 15 | fill in the blank 16 |
| Total units to be assigned costs | fill in the blank 17 | fill in the blank 18 | fill in the blank 19 |
| Costs | Direct Materials | Conversion | Total Costs |
|---|---|---|---|
| Cost per equivalent unit: | |||
| Total costs for August in Roasting Department | $fill in the blank 20 | $fill in the blank 21 | |
| Total equivalent units | fill in the blank 22 | fill in the blank 23 | |
| Cost per equivalent unit (2) | $fill in the blank 24 | $fill in the blank 25 | |
| Costs assigned to production: | |||
| Inventory in process, August 1 | |||
| Costs incurred in August | fill in the blank 27 | ||
| Total costs accounted for by the Roasting Department | |||
| Costs allocated to completed and partially completed units: | |||
| Inventory in process, August 1 balance | |||
| To complete inventory in process, August 1 | |||
| Cost of completed August 1 work in process | |||
| Started and completed in August | |||
| Transferred to finished goods in August (3) | |||
| Inventory in process, August 31 (4) | |||
| Total costs assigned by the Roasting Department |
b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (July). If required, round your answers to two decimal places.
| Line Item Description | Increase or Decrease | Amount |
|---|---|---|
| Change in direct materials cost per equivalent unit |
|
|
| Change in conversion cost per equivalent unit |
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