Cost of Production Report Venus Chocolate Company processes

Cost of Production Report

Venus Chocolate Company processes chocolate into candy bars. The process begins by placing direct materials (raw chocolate, milk, and sugar) into the Blending Department. All materials are placed into production at the beginning of the blending process. After blending, the milk chocolate is then transferred to the Molding Department, where the milk chocolate is formed into candy bars. The following is a partial work in process account of the Blending Department at March 31, 2016:

Required:

1. Prepare a cost of production report, and identify the missing amounts for Work in Process—Blending Department. If an amount is zero, enter \"0\". When computing cost per equivalent units, round to two decimal places.

2. Assuming that the March 1 work in process inventory includes $10,080 of direct materials, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between February and March. If required, round your answers to the nearest cent.

ACCOUNT Work in Process—Blending Department	ACCOUNT NO.
Date	Item	Debit	Credit	Balance
Debit	Credit
Mar.	1	Bal., 4,800 units, 1/5 completed			10,752
	31	Direct materials, 192,000 units	422,400			433,152
	31	Direct labor	92,500			525,652
	31	Factory overhead	23,180			548,832
	31	Goods transferred, 193,000 units		?
	31	Bal., ? units, 1/5 completed			?

Solution

Venus Chocolate Company Cost of Production Report-Blending Department For the Month Ended March 31, 2016 Unit Information Units charged to production: Inventory in process, March 1 4800 Received from materials storeroom 192000 Total units accounted for by the Blending Department 196800 Units to be assigned costs: Equivalent Units Whole Units Direct Materials Conversion Inventory in process, March 1 4800 0 3840 Started and completed in March 188200 188200 188200 Transferred to Packing Department in March 193000 188200 192040 Inventory in process, March 31 3800 3800 760 Total units to be assigned costs 196800 192000 192800 Cost Information Costs per equivalent unit: Direct Materials Conversion Total costs for March in Blending Department 422400 115680 Total equivalent units 192000 192800 Cost per equivalent unit 2.2 0.6 Costs charged to production: Direct Materials Conversion Total Inventory in process, March 1 10752 Costs incurred in March 538080 Total costs accounted for by the Blending Department 548832 Cost allocated to completed and partially completed units: Inventory in process, March 1 balance 10752 To complete inventory in process, March 1 0 2304 2304 Cost of completed March 1 work in process 13056 Started and completed in March 414040 112920 526960 Transferred to Packing Department in March 540016 Inventory in process, March 31 8360 456 8816 Total costs assigned by the Blending Department 548832 2 Increase or Decrease Amount Change in direct materials cost per equivalent unit Increase 0.1 =2.2-(10080/4800) Change in conversion cost per equivalent unit Decrease 0.1 =((10752-10080)/960)-0.6