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 (900 units, 3/5 completed): Direct materials (900 × $2.05) $1,845 Conversion (900 x 3/5 * $0.40) 216 $2,061 The following costs were charged to Work in Process-Sifting Department during July: Direct materials transferred from Milling Department: 15,700 units at $2.15 a unit $33,755 Direct labor Factory overhead 4,420 2,708 During July, 15,500 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).
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 (900 units, 3/5 completed): Direct materials (900 × $2.05) $1,845 Conversion (900 x 3/5 * $0.40) 216 $2,061 The following costs were charged to Work in Process-Sifting Department during July: Direct materials transferred from Milling Department: 15,700 units at $2.15 a unit $33,755 Direct labor Factory overhead 4,420 2,708 During July, 15,500 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).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text: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
(900 units, 3/5 completed):
Direct materials (900 x $2.05) $1,845
Conversion (900 x 3/5 * $0.40) 216
$2,061
The following costs were charged to Work in Process-Sifting Department during July:
Direct materials transferred from Milling Department:
15,700 units at $2.15 a unit
$33,755
Direct labor
4,420
Factory overhead
2,708
During July, 15,500 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).
Transcribed Image Text:UNITS
Units charged to production:
Inventory in process, July 11
WHITE DIAMOND FLOUR COMPANY
COSTS
Cost
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)
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
Production Report-Sifting Department
For the Month Ended July 31
Cost per equivalent unit:
Total costs for July in Sifting Department
Total equivalent units
Cost per equivalent unit
Costs assigned to production:
Inventory in process, July 11
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
Cost of completed July 1 work in process
Started and completed in July
Transferred to Packaging Department in July
Inventory in process, July 311
Total costs assigned by the Sifting Department
Whole Units
$
+
$
$
Direct Materials
Direct Materials
$
+
$
Equivalent Units
$
Costs
Conversion
Conversion
$
$
$
$
Total
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