Question
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
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 | |
(1,000 units, 3/5 completed): | |
Direct materials (1,000 $2.15) | $2,150 |
Conversion (1,000 3/5 $0.40) | 240 |
$2,390 |
The following costs were charged to Work in Process-Sifting Department during July:
Direct materials transferred from Milling Department: | |
16,700 units at $2.25 a unit | $37,575 |
Direct labor | 4,540 |
Factory overhead | 3,056 |
During July, 16,600 units of flour were completed. Work in Process-Sifting Department on July 31 was 1,100 units, 4/5 completed.
Required: | |
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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 unitfrom June to July for direct materials and conversion costs. |
4. | Discuss the uses of the cost of production report and the results of part (3). |
CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
White Diamond Flour Company | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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1. Prepare a cost of production report for the Sifting Department for July.
Cost of Production Report Instructions
WHITE DIAMOND FLOUR COMPANY | |||
Cost of Production Report-Sifting Department | |||
For the Month Ended July 31 | |||
UNITS | Whole Units | Equivalent Units | |
Direct Materials | Conversion | ||
Units charged to production: | |||
Inventory in process, July 1 | |||
Received from Milling Department | |||
TotalunitsaccountedforbytheSiftingDepartment | |||
Units to be assigned costs: | |||
Inventoryinprocess,July1(3/5completed) | |||
Started and completed in July | |||
Transferred to Packaging Department in July | |||
Inventory in process, July 31 (4/5 completed) | |||
Total units to be assigned costs |
Points:
1 / 18
Feedback
COSTS | Costs | ||
Direct Materials | Conversion | Total | |
Cost per equivalent unit: | |||
TotalcostsforJulyinSiftingDepartment | |||
Total equivalent units | |||
Cost per equivalent unit | |||
Costs assigned to production: | |||
Inventory in process, July 1 | |||
Costs incurred in July | |||
TotalcostsaccountedforbytheSiftingDepartment | |||
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 |
2. Journalize the entries for costs transferred from Milling to Sifting and the costs transferred from Sifting to Packaging. Use the date July 31 for all journal entries.
General Journal Instructions
Question not attempted.
PAGE 10
JOURNAL
ACCOUNTING EQUATION
Score: 0/51
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
---|---|---|---|---|---|---|---|---|
1 | ||||||||
2 | ||||||||
3 | ||||||||
4 |
3. Determine the increase or decrease in the cost per equivalent unit from June to July for direct materials and conversion costs.
Additional Instruction
Direct materials: | |
Conversion: |
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.
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