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

Wilmington 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 ProcessFilling was as follows on December 1, 2014:

Work in ProcessFilling Department (3,900 units, 30% completed): Direct materials (3,900 x $14.10) $54,990 Conversion (3,900 x 30% x $9.10) 10,647 $65,637

The following costs were charged to Work in ProcessFilling during December:

Direct materials transferred from Reaction Department: 50,300 units at $13.80 a unit $694,140 Direct labor 244,900 Factory overhead 235,292

During December, 49,900 units of specialty chemicals were completed. Work in ProcessFilling Department on December 31 was 4,300 units, 30% completed.

Required:

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Hint(s)

1. Prepare a cost of production report for the Filling Department for December. If an amount is zero, enter "0". If required, round your cost per equivalent unit answers to two decimal places.

Wilmington Chemical Company

Cost of Production Report-Filling Department

For the Month Ended December 31, 2014

Unit Information Units charged to production:

Inventory in process, December 1

Received from Reaction Department

Total units accounted for by the Filling Department

Units to be assigned costs:

Equivalent Units

Whole Units

Direct Materials

Conversion

Inventory in process, December 1

Started and completed in December

Transferred to finished goods in December

Inventory in process, December 31

Total units to be assigned costs

Cost Information Costs per equivalent unit:

Direct Materials

Conversion

Total costs for December in Filling Department

$

$

Total equivalent units

Cost per equivalent unit

$

$

Costs charged to production:

Direct Materials

Conversion

Total

Inventory in process, December 1

$

Costs incurred in December

Total costs accounted for by the Filling Department

$

Cost allocated to completed and partially completed units:

Inventory in process, December 1 balance

$

To complete inventory in process, December 1

$

Cost of completed December 1 work in process

$

Started and completed in December

$

Transferred to finished goods in December

$

Inventory in process, December 31

Total costs assigned by the Filling Department

$

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1. Calculate equivalent units for materials and conversion costs. Calculate the cost per equivalent unit for materials and conversion costs. Calculate the costs assigned to the beginning inventory, the units started and completed, and the ending inventory.

Learning Objective 2, Learning Objective 3 and Learning Objective 4.

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2. Journalize the entries for (1) costs transferred from Reaction to Filling and (2) the cost transferred from Filling to Finished Goods.

(1)

(2)

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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?

Learning Objective 2, Learning Objective 3 and Learning Objective 4.

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

Increase or Decrease Amount Change in direct materials cost per equivalent unit Select Decrease Increase Correct 1 of Item 3 $ Change in conversion cost per equivalent unit Select Decrease Increase Correct 3 of Item 3 $

4. The cost of production report may be used as the basis for allocating product costs between Select Work in Process Finished Goods Correct 5 of Item 3 and Select Transferred-Out Goods Cost of Goods Sold Correct 6 of Item 3 . 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.

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3 and 4. Compare the costs per equivalent unit for November and December. Review the benefits of the cost of production report.

Learning Objective 2, Learning Objective 3 and Learning Objective 4.

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Question 1 of 1 Problem 18-3 (Algorithmic)