Lily 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 a packaged refined flour. - The balance in the account Work in Process - Sifting Department was as follows on July 1st, 2014:

Work in Process - Sifting Department (700 units, 3/5 completed)

Direct Materials (700x$2.58) - $1806

Conversion (700 x 3/5 x 0.55) - $231

________________________________

$2037

The following costs were charged to Work in Process - Sifting Dept during July:

Direct Materials transferred from the Milling Dept:

12,300 units at $2.60 a unit - $31,980

Direct Labor - $4,670

Factory Overhead - $2,578

During July, 12,000 units of flour were completed. Work in Process - Sifting Department on July 31st was 1,000 units, 4/5 completed.

1) Prepare a cost of production report for the Sifting Department for July

2) Journalize the entries for costs transferred from the Milling to SIfting and the costs transferred from Sifting to Pacakaging

3) Determine the increase or decrease in the cost per equivalent unit from June to July for direct materials and conversion costs