Equivalent Units and Related Costs; Cost of Production Report; Entries

Dover 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 January $1$:

Work in Process$$Filling Department

$(3,400$ units, $60\%$ completed$)$:

Line Item Description Amount

Direct materials $(3,400\backslash$times $$9\mathrm{.}58)$ $$32,572$

Conversion $(3,400\backslash$times $60\%\backslash$times $$3\mathrm{.}90)7,956$

Total $$40,528$

The following costs were charged to Work in Process$$Filling during January:

Direct materials transferred from Reaction

Line Item Description Amount

Department: $52,300$ units at $$9\mathrm{.}50$ a unit $$496,850$

Direct labor $101,560$

Factory overhead $95,166$

During January, $53,000$ units of specialty chemicals were completed. Work in Process$$Filling Department on January $31$ was $2,700$ units, $30\%$ completed.

Required:

Question Content Area

$1.$ Prepare a cost of production report for the Filling Department for January. If an amount is zero, enter $"0".$ If required, round your cost per equivalent unit answers to the nearest cent. $($Please use the format given$)$

$2.$ Journalize the entries for $(1)$ costs transferred from Reaction to Filling and $(2)$ the costs transferred from Filling to Finished Goods. If an amount box does not require an entry, leave it blank.

$3.$ Determine the increase or decrease in the cost per equivalent unit from December to January for direct materials and conversion costs. If required, round your answers to two decimal places.

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

The cost of production report may be used as the basis for allocating product costs between $....$

and $...$ The report can also be used to control costs by holding each department head responsible for the units entering production and the costs incurred in the department. Any differences in unit product costs from one month to another, such as those in part $(3),$ can be studied carefully and any significant differences investigated.