Question

Work in Process Account Data for Two Months; Cost of Production Reports

Hearty Soup Co. uses a process cost system to record the costs of processing soup, which requires the cooking and filling processes. Materials are entered from the cooking process at the beginning of the filling process. The inventory of Work in Process—Filling on April 1 and debits to the account during April were as follows:

Bal., 1,200 units, 70% completed:
	Direct materials (1,200 x $4.80)	$ 5,760
	Conversion (1,200 x 70% x $2.00)	1,680
		$ 7,440
From Cooking Department, 25,920 units		$127,008
Direct labor		33,333
Factory overhead		17,949

During April, 1,200 units in process on April 1 were completed, and of the 25,920 units entering the department, all were completed except 3,100 units that were 40% completed. Charges to Work in Process—Filling for May were as follows:

From Cooking Department, 29,800 units	$151,980
Direct labor	43,440
Factory overhead	23,396

During May, the units in process at the beginning of the month were completed, and of the 29,800 units entering the department, all were completed except 1,600 units that were 20% completed.

Required:

1. Enter the balance as of April 1 in a four-column account for Work in Process—Filling. Record the debits and credits in the account for April. Construct a cost of production report and present computations for determining (a) equivalent units of production for materials and conversion; (b) cost per equivalent unit; (c) cost of goods finished, differentiating between units started in the prior period and units started and finished in April; and (d) work in process inventory. If an amount box does not require an entry, leave it blank.

2. Provide the same information for May by recording the May transactions in the four-column work in process account. Construct a cost of production report and present the May computations (a through d) listed in part (1). If an amount box does not require an entry, leave it blank.

3. The cost per equivalent unit for direct materials from March to May. The cost per equivalent unit for conversion costs from March to May. These changes be investigated for their underlying causes, and any necessary corrective actions should be taken.

Answer 1

Answer-1:

Work in process-Filing
Date	Particulars	Debit	Credit	Balance
				Debit	Credit
Apr.01	Balance, 1200 units			$             7,440
Apr.30	Cooking Dept	$        127,008		134,448
Apr.30	Direct labor	33,333		167,781
Apr.30	Factory overhead	17,949		185,730
Apr.30	Finished goods		165,131	20,599
Apr.30	Balance, 3100 units			20,599

Cost of production report
Items	Physical units	EUP
		Material	Conversion
Beg. WIP, Apr.01	1,200
Received from cooking dept	25,920
Total units to be accounted for filing dept	27,120
Total units to be assigned cost:
Beg. WIP, Apr.01	1,200		840
Started & completed in Apr	22,820	22,820	22,820
Transferred to FG in Apr	24,020	22,820	23,660
End. WIP, Apr.30	3,100	3,100	2,790
Total units to be assigned cost:	27,120
Total equivalent units		25,920	26,450
Cost Per Equivalent Unit
	Direct material	Conversion
Total cost in Apr for filing Dept	$         127,008	$          51,282
Total Equivalent units	25,920	26,450
Cost per equivalent unit	$                4.90	$              1.94

Cost assignment and reconciliation
	EUP	Cost per EUP	Total costs
Cost of units transferred out
Direct material	22,820	$              4.90	$         111,818
Conversion	22,820	1.94	44,244
Total costs transferred out			156,062
Cost of ending work in process
Direct material	3,100	4.90	15,190
Conversion	2,790	1.94	5,409
Total costs of ending work in process			20,599
Total cost assigned				$    176,661
Cost reconciliation report:
Beg. WIP cost:
Direct material	$              5,760
Conversion	1,680
Add: Cost incurred in filing dept.	178,290
Total cost to account for in filing Dept.	$         185,730
Cost of completed in Apr.01 WIP	9,069
Cost assigned to units completed and transferred	156,062
Add: Cost assigned to ending WIP	20,599
Total cost to accounted for	$         185,730