White Diamond Flour Company manufactures flour by a series of three processes, beginning with wheat grain being introduced in the Milling Department. From the Milling Department, the materials pass through the Sifting and Packaging departments, emerging as packaged refined flour. The balance in the account Work in Process—Sifting Department was as follows on July 1: Work in Process—Sifting Department (900 units, 3/5 completed) on July 1 Cost Source Dollar Amount Direct Materials (900 x $3.15) $2,835 Conversion (900 x 3/5 x $0.30) 162 Total Materials and Conversion 2,997 The following costs were charged to Work in Process—Sifting Department during July: Work in Process—Sifting Department Cost Source Dollar Amount Direct materials transferred from Milling Department: 15,700 units at $2.30 a unit $36,110 Direct Labor 5,420 Factory Overhead 2,384 During July, 15,500 units of flour were completed. Work in Process—Sifting Department on July 31 was 1,100 units, 4/5 completed. Instructions a. Prepare a cost of production report for the Sifting Department for July. b. Journalize the entries for costs transferred from Milling to Sifting and the costs transferred from Sifting to Packaging. c. Determine the increase or decrease in the cost per equivalent unit from June to July for direct materials and conversion costs. d. Discuss the uses of the cost of production report
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.
White Diamond Flour Company manufactures flour by a series of three processes, beginning with wheat
grain being introduced in the Milling Department. From the Milling Department, the materials pass
through the Sifting and Packaging departments, emerging as packaged refined flour. The balance in the
account Work in Process—Sifting Department was as follows on July 1:
Work in Process—Sifting Department (900 units, 3/5 completed) on July 1
Cost Source Dollar Amount
Direct Materials (900 x $3.15) $2,835
Conversion (900 x 3/5 x $0.30) 162
Total Materials and Conversion 2,997
The following costs were charged to Work in Process—Sifting Department during July:
Work in Process—Sifting Department
Cost Source Dollar Amount
Direct materials transferred from Milling Department:
15,700 units at $2.30 a unit $36,110
Direct Labor 5,420
Factory
During July, 15,500 units of flour were completed. Work in Process—Sifting Department on July 31 was
1,100 units, 4/5 completed.
Instructions
a. Prepare a cost of production report for the Sifting Department for July.
b.
Sifting to Packaging.
c. Determine the increase or decrease in the cost per equivalent unit from June to July for direct
materials and conversion costs.
d. Discuss the uses of the cost of production report and the results of part (c)
The question is based on the concept of Cost Accounting.
Cost of production shows the cost incurred on units in process with respect to material and conversion.
As per the Bartleby guidelines we are allowed to answer only the first three sub-parts in case of multiple sub-parts.
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