Northway Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in

Question:

Northway Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling Departments, emerging as finished chemicals. The balance in the account Work in Process—Filling was as follows on December 1, 2006:

Work in Process—Filling Department

(1,200 units, 30% completed):

Direct materials (1,200 x $15.20) .......$18,240

Conversion (1,200 x 30% x $8.15) ...... 2,934

$21,174

The following costs were charged to Work in Process—Filling during December:

Direct materials transferred from Reaction

Department: 36,400 units at $15.25 a unit .......$555,100

Direct labor .................... 119,443

Factory overhead .................. 179,160

During December, 36,100 units of specialty chemicals were completed. Work in Process—Filling Department on December 31 was 1,500 units, 45% completed.


Instructions

1. Prepare a cost of production report for the Filling Department for December.

2. Journalize the entries for costs transferred from Reaction to Filling and the cost of goods transferred to finished goods.

3. Determine the increase or decrease in the cost per equivalent unit from November to December for direct materials and conversion costs.

4. Discuss the uses of the cost of production report and the results of (3).


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Accounting

ISBN: 978-0324188004

21st Edition

Authors: Carl s. warren, James m. reeve, Philip e. fess

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