Instructions 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 Direct labor Factory overhead $37,575 4,540 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: 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: 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. 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 110 Cash 121 Accounts Receivable 125 Notes Receivable 126 Interest Receivable 131 Materials REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold Receivab 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 171 Supplies Revenue EXPENSES 510 Cost of Goods Sold 520 Wages Expense 531 Selling Expenses 532 Insurance Expense 533 Utilities Expense 534 Supplies Expense 540 Administrative Expenses 561 Depreciation Expense-Factory 590 Miscellaneous Expense 153 Factory Overhead-Packaging Department 161 Finished Goods 171 Supplies 172 Prepaid Insurance 173 Prepaid Expenses 181 Land 191 Factory 192 Accumulated Depreciation-Factory 540 Administrative Expenses 561 Depreciation Expense-Factory 590 Miscellaneous Expense 710 Interest Expense LIABILITIES LIABILITIES 210 Accounts Payable 221 Utilities Payable 231 Notes Payable 236 Interest Payable 251 Wages Payable EQUITY 311 Common Stock EQUITY 311 Common Stock 340 Retained Earnings 351 Dividends 390 Income Summary 1. Prepare a cost of production report for the Sifting Department for July. Cost of Production Report Instructions UNITS WHITE DIAMOND FLOUR COMPANY Cost of Production Report-Sifting Department For the Month Ended July 31 Whole Units Equivalent Units Conversion Direct Materials 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 (3/5 completed) For the Month Ended July 31 Whole Units Equivalent Units Direct Materials Conversion Units to be assigned costs: Inventory in process, July 1 (3/5 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 Cost per equivalent unit: COSTS Total costs for July in Sifting Department $ Total equivalent units Cost per equivalent unit Costs assigned to production: Direct Materials $ Costs Conversion Total Total equivalent units Cost per equivalent unit Costs assigned to production: Inventory in process, July 1 Costs incurred in July Total costs accounted for by the Sifting Department Costs allocated to completed and partially completed units: Inventory in process, July 1-balance $ $ $ $ $ To complete inventory in process, July 1 $ $ 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 1 2 DATE DESCRIPTION JOURNAL PAGE 10 ACCOUNTING FOLIATION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 2 DATE DESCRIPTION JOURNAL ACCOUNTING FOLIATION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 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: $ 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 Additional Instruction Direct materials: $ Conversion: $ 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. Instructions 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 Direct labor Factory overhead $37,575 4,540 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: 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: 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. 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 110 Cash 121 Accounts Receivable 125 Notes Receivable 126 Interest Receivable 131 Materials REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold Receivab 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 171 Supplies Revenue EXPENSES 510 Cost of Goods Sold 520 Wages Expense 531 Selling Expenses 532 Insurance Expense 533 Utilities Expense 534 Supplies Expense 540 Administrative Expenses 561 Depreciation Expense-Factory 590 Miscellaneous Expense 153 Factory Overhead-Packaging Department 161 Finished Goods 171 Supplies 172 Prepaid Insurance 173 Prepaid Expenses 181 Land 191 Factory 192 Accumulated Depreciation-Factory 540 Administrative Expenses 561 Depreciation Expense-Factory 590 Miscellaneous Expense 710 Interest Expense LIABILITIES LIABILITIES 210 Accounts Payable 221 Utilities Payable 231 Notes Payable 236 Interest Payable 251 Wages Payable EQUITY 311 Common Stock EQUITY 311 Common Stock 340 Retained Earnings 351 Dividends 390 Income Summary 1. Prepare a cost of production report for the Sifting Department for July. Cost of Production Report Instructions UNITS WHITE DIAMOND FLOUR COMPANY Cost of Production Report-Sifting Department For the Month Ended July 31 Whole Units Equivalent Units Conversion Direct Materials 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 (3/5 completed) For the Month Ended July 31 Whole Units Equivalent Units Direct Materials Conversion Units to be assigned costs: Inventory in process, July 1 (3/5 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 Cost per equivalent unit: COSTS Total costs for July in Sifting Department $ Total equivalent units Cost per equivalent unit Costs assigned to production: Direct Materials $ Costs Conversion Total Total equivalent units Cost per equivalent unit Costs assigned to production: Inventory in process, July 1 Costs incurred in July Total costs accounted for by the Sifting Department Costs allocated to completed and partially completed units: Inventory in process, July 1-balance $ $ $ $ $ To complete inventory in process, July 1 $ $ 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 1 2 DATE DESCRIPTION JOURNAL PAGE 10 ACCOUNTING FOLIATION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 2 DATE DESCRIPTION JOURNAL ACCOUNTING FOLIATION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 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: $ 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 Additional Instruction Direct materials: $ Conversion: $ 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.