Carton Corporation produces a line of beverage cartons. The production process has been automated, so the product can now be produced in one operation rather than in the three operations that were needed before the company purchased the automated machinery. All direct materials are added at the beginning of the process, and conversion costs are incurred uniformly throughout the process. Operating data for July and August are as follows:

1. Using the average costing method, prepare process cost reports for July and August. (Round unit costs to two decimal places; round all other costs to the nearest dollar.)
2. From the information in the process cost report for July, identify the amount that should be transferred out of the Work in Process Inventory account, and state where those dollars should be transferred.
3. Compare the product costing results for August with the results for July. What is the most significant change? What are some of the possible causes of this change?

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July August Beginning work in process invensory Units (July: 20% complete) Direct materials Conversion costs 20,000 $20,000 $30,000 $6,000 $6,000 Production during the month Units started Direct materials Conversion costs 70,000 $34,000 90,000 $59,000 96,000 S130,800 Ending work in process inventory Units (July: 40% complete; August: 60% complete) 10,000 25,000