Question

Cost of Production Report The Cutting Department of Karachi Carpet Company provides the following data for January. Assume that all materials are added at the beginning of the process. Work in process, January 1, 14,400 units, 60% completed $181,152* *Direct materials (14,400 × $9.4) $135,360 Conversion (14,400 × 60% × $5.3) 45,792 $181,152 Materials added during January from Weaving Department, 221,600 units $2,094,120 Direct labor for January 535,280 Factory overhead for January 654,232 Goods finished during January (includes goods in process, January 1), 224,200 units — Work in process, January 31, 11,800 units, 40% completed — a. Prepare a cost of production report for the Cutting Department. If an amount is zero or a blank, enter in "0". For the cost per equivalent unit computations, round your answers to two decimal places. Karachi Carpet Company Cost of Production Report-Cutting Department For the Month Ended January 31 Unit Information Units charged to production: Inventory in process, January 1 Received from Weaving Department Total units accounted for by the Cutting Department Units to be assigned costs: Equivalent Units Whole Units Direct Materials Conversion Inventory in process, January 1 Started and completed in January Transferred to finished goods in January Inventory in process, January 31 Total units to be assigned costs Cost Information Costs per equivalent unit: Direct Materials Conversion Total costs for January in Cutting Department $ $ Total equivalent units Cost per equivalent unit $ $ Costs assigned to production: Direct Materials Conversion Total Inventory in process, January 1 $ Costs incurred in January Total costs accounted for by the Cutting Department $ Cost allocated to completed and partially completed units: Inventory in process, January 1 balance $ To complete inventory in process, January 1 $ Cost of completed January 1 work in process $ Started and completed in January $ Transferred to finished goods in January $ Inventory in process, January 31 Total costs assigned by the Cutting Department $ b. Compute and evaluate the change in the costs per equivalent unit for direct materials and conversion from the previous month (December). If required, round your answers to two decimal places. Increase or Decrease Amount Change in direct materials cost per equivalent unit $ Change in conversion cost per equivalent unit $

Answer 1

a)
Carpet company
Cost of production report - Cutting Department:
Units charged to production:
WIP Jan 1	14400
Recd. From Weaving deptt.	221600
Total units to account for	236000
Total units accounted for:
Tranferred to next process	224200
WIP Jan 31	11800
Total units accounted for:	236000
Assigned costs and reconciliations:
	Whole units	DM	Conversion	total
WIP Jan 1	14400	0	14400*0.4=5760	181152
Started and completed in Jan	209800	209800	209800
Tranferred out	224200
WIP Jan 31	11800	11800	11800*0.4=4720
Equivalent units		221600	220280
Costs:
Incurred during jan		2094120	1189512	3283632
Total Cost to account for				3464784
Cost per Eq unit		9.45	5.4
Cost of transferred out;
Cost of WIP Jan 1		135360	45792	181152
Incurred during jan		0	5760*5.4=31104	31104
Total cost WIP jan1				212256
Cost of started and completed		209800*9.45=1982610	209800*5.4=1132920	3115530
Total cost of Transferred out				3327786
Cost of WIP Jan 31		11800*9.45=111510	4720*5.4=25488	136998
Total Cost accounted for				3464784
b)		DM	Conversion
Cost per unit in Dec		9.4	5.3
Cost per unit in Jan		9.45	5.4
Increase or decrease:
Change in DM (incease)		$0.05
Change in Conversion(increase)			$0.10