Equivalent units and related costs; cost of production report; entries Instructions Chart of Accounts ! Cost of Production Report Journal Final Questions Instructions White Diamond Flour Company manufactures flour by a series of three processes, beginning with wheat grain being introduced in the Milling Department. From the Milling Department, the materials pass through the Sifting and Packaging departments, emerging as packaged refined flour. The balance in the account Work in Process-Sifting Department was as follows on July 1: Work in Process-Sifting Department (800 units, 3/5 completed): Direct materials (800 x $2.15) $1,720 Conversion (800 x 3/5 x $0.50) 240 $1,960 The following costs were charged to Work in Process-Sifting Department during July: Direct materials transferred from Milling Department: 15,500 units at $2.25 a unit Direct labor Factory overhead $34,875 4,540 4,018 During July, 15,000 units of flour were completed. Work in Process-Sifting Department on July 31 was 1,300 units, 4/5 completed. Required: 1. Prepare a cost of production report for the Sifting Department for July. If an amount is zero, enter "0". Round your cost per unit answers to the nearest cent and final answers to the nearest dollar amount. 2. Journalize the entries for costs transferred from Milling to Sifting and the costs transferred from Sifting to Packaging. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for spaces or journal explanations. Every line on a journal page is used for debit or credit entries. Do not add explanations or skip a line between journal entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Use the date July 31 for all journal entries. 3. Determine the increase or decrease in the cost per equivalent unit from June to July for direct materials and conversion costs. Round your answers to the nearest cent. 4. Discuss the uses of the cost of production report and the results of part (3). Chart of Accounts CHART OF ACCOUNTS White Diamond Flour Company General Ledger ASSETS 110 Cash 121 Accounts Receivable 125 Notes Receivable 126 Interest Receivable 131 Materials 141 Work in Process-Milling Department 142 Work in Process-Sifting Department 143 Work in Process-Packaging Department 151 Factory Overhead-Milling Department 152 Factory Overhead-Sifting Department 153 Factory Overhead-Packaging Department 161 Finished Goods REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 520 Wages Expense 531 Selling Expenses 532 Insurance Expense 533 Utilities Expense 534 Supplies Expense 540 Administrative Expenses 561 Depreciation Expense-Factory 171 Supplies 172 Prepaid Insurance 173 Prepaid Expenses 181 Land 191 Factory 192 Accumulated Depreciation-Factory 590 Miscellaneous Expense 710 Interest Expense LIABILITIES 210 Accounts Payable 221 Utilities Payable 231 Notes Payable 236 Interest Payable 251 Wages Payable EQUITY 311 Common Stock 340 Retained Earnings 351 Dividends 390 Income Summary Cost of Production Report 1. Prepare a cost of production report for the Sifting Department for July. If an amount is zero, enter "0". Round your cost per unit answers to the nearest cent and final answers to the nearest dollar amount. UNITS WHITE DIAMOND FLOUR COMPANY Cost of Production Report-Sifting Department For the Month Ended July 31 Whole Units Units charged to production: Inventory in process, July 1 800 Received from Milling Department 15,500 Total units accounted for by the Sifting Department 16,300 Units to be assigned costs: Inventory in process, July 1 (3/5 completed) 800 Started and completed in July Transferred to Packaging Department in July 14,200 Inventory in process, July 31 (4/5 completed) Total units to be assigned costs 1,300 Equivalent Units Direct Materials Conversion Points: 6/18 Shaded cells Costs COSTS Direct Materials Conversion Total Cost per equivalent unit: Total costs for July in Sifting Department Total equivalent units Cost per equivalent unit Costs assigned to production: Inventory in process, July 1 Costs incurred in July Total costs accounted for by the Sifting Department Costs allocated to completed and partially completed units: Inventory in process, July 1-balance To complete inventory in process, July 1 Cost of completed July 1 work in process Started and completed in July Transferred to Packaging Department in July Inventory in process, July 31 Total costs assigned by the Sifting Department S $ $ $ $ GA Journal Shaded cells have feedback. 2. Journalize the entries for costs transferred from Milling to Sifting and the costs transferred from Sifting to Packaging. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for spaces or journal explanations. Every line on a journal page is used for debit or credit entries. Do not add explanations or skip a line between journal entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Use the date July 31 for all journal entries. Question not attempted. DATE 1 2 3 Feedback Check My Work DESCRIPTION JOURNAL Score: 0/51 POST. REF. DEBIT CREDIT PAGE 10 ACCOUNTING EQUATION ASSETS LIABILITIES EQUITY Points: 0/10 2. Remember that there are three types of inventory: materials, work in process, and finished goods. What costs are captured in the Work in Process account? Are these units 100% complete or are they being transferred to another department? Final Questions 3. Determine the increase or decrease in the cost per equivalent unit from June to July for direct materials and conversion costs. Round your answers to the nearest cent. Direct materials: $ Conversion: $ Shaded cells have feedback. Points: 0/4 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. Feedback Check My Work 3. Compare the cost per equivalent unit for June and July. 4. Review the benefits of the cost of production report. Points: 0/2