Lily Flour Company manufactures flour by a series of three processes, beginning with wheat 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 1, 2014: Work in Process--Sifting Department (700 units, 3/5 completed): Direct Materials (700x$2.58) $1806 Conversion (700x$0.55) 231 equals $2037 The following costs were charged to Work in Process--Sifting Department during July: Direct materials transferred from Milling Department: 12,300 units at $2.60 a unit $31980 Direct Labor 4670 Factory Overhead 2758 During July, 12,000 units of flour were completed. Work in Process--Sifting Department on July 31 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 Milling to Sifting and the costs transferred from Sifting to Packaging. 3. Determine the increase or decrease in the cost per equivalent unit from June to July for direct materials and conversion costs. I have some completed and have attached my work.

a. The number of units in work in process inventory at the end of the period......640 units 16,000+900=16,900 16,900-16,260=640 b. Equivalent units of production for direct materials and conversion.... Direct materials=(16260-900)+640=6000EU Conversion cost=900x65%+(16260-900)x100%+540x45%=585+15360+288=16233EU c. Costs per equivalent unit for direct materials and conversion.... Direct materials=336000/16000=$21 per EU Conversion=(101380+93416)/16233=$12 per EU d. Cost of the units started and completed during the period... 16260x(21+12)=$536,580 Lily Flour Company Cost of Production Report-Sifting Department For the Month Ended July 31, 2014 Whole Units Units Units charged to production: Inventory in process, July 1 Received from Milling Department Total units accounted for by the Sifting Department Units to be assigned costs: Inventory in process, July 1 Started and completed in July Transferred to Packaging Department in July Inventory in process, July 31 Total units to be assigned costs Cost per equivalent unit: Total costs for July in Sifting Department Total equivalent units Cost per equivalent unit Equivalent Units 700 12300 13000 Costs Direct Materials Conversion Whole Units 700 12000 12700 1000 13700 12000 12000 1000 13000 231 12000 12231 800 13031 Direct Materials Conversion Total $31,980.00 $2,758.00 13000 13031 $2.46 $0.21 Costs assigned to production: Inventory in process, July 1 Costs incurred in July Total costs accounted for by the Sifting Department Cost 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 $2,037.00 36650 $38,687.00 $8,845.00 12000 2.46 $2,460.00 $168.00 $2,037.00 8845 $10,882.00 29520 $38,365.00 2628 $40,993.00 2. Journalize the entries for (1) costs transferred from Milling to Sifting and (2) the costs transferred from Sifting to Packaging. 1 2 Determine the increase or decrease in the cost per equivalent unit from June to July 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 $ Change in conversion cost per equivalent unit $ 4 The cost of production report can be used for allocating the product costs between resources that are used and those that are supplied. This report can also be used to help control the cost by holding each department in the company responsible for the costs that are incurred