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 $2.15) $1,720 Conversion (800 * 3/5 * $0.40) 192 $1,912 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 3,020 During July, 16,400 units of flour were completed. Work in Process-Sifting Department on July 31 was 1,100 units, completed. Required: 1. Prepare a cost of production report for the Sifting Department for July. If required, round your cost per equivalent unit answers to two decimal places. If an amount is zero, enter zero "0". 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 correct wording of account titles. 3. 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. 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 ASSETS REVENUE 110 Cash 410 Sales 810 Interest Revenue 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 EXPENSES 510 Cost of Goods Sold 520 Wages Expense 531 Selling Expense 532 Insurance Expense 533 Utilities Expense 534 Supplies Expense 540 Administrative Expense 581 Depreciation Expense-Factory 590 Miscellaneous Expense 710 Interest Expense 171 Supplies 172 Prepaid Insurance 173 Prepaid Expenses 181 Land 191 Factory 192 Accumulated Depreciation-Factory 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 WHITE DIAMOND FLOUR COMPANY Cost of Production Report-sifting Department For the Month Ended July 31 Equivalent Units UNITS Whole Units Direct Materials Conversion Units charged to production: Inventory in process, July 1 Received from Milling Department Total units accounted for by the Siting Department Units to be assigned 006 Inventory in process, July 1 (315 completed) 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 Costs COSTS Direct Materials Conversion Total Cost per equivalent unit Total costs for July in Siting Department Total equivalent units Cost per equivalent unt Costs assigned to production Inventory in process, July 1 Costs Inourred in July Total costs accounted for by the Siting 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 Siting Department 2. Joumalize the entries for costs transferred from Milling to Sifting and the costs transferred from Sifting to Packaging. Refer to the Chart of Accounts for correct wording of account titles. PAGE 10 JOURNAL DATE DESCRIPTION POST. REF. DEBIT CREDIT ACCOUNTING FOLATION ASSETS LIABILITIES EQUITY 1 2 3 4 Final Questions 3. 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 two decimal places. Direct materials: Conversion: 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 4. The cost of production report may be used as the basis for allocating product costs between and 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