Dover Chemical Company manufactures specialty chemicals by a

Dover Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling departments, emerging as finished chemicals.

The balance in the account Work in Process—Filling was as follows on January 1:

The following costs were charged to Work in Process—Filling during January:

During January, 34,500 units of specialty chemicals were completed. Work in Process—Filling Department on January 31 was 3,000 units, 10% completed.

Required:

1. Prepare a cost of production report for the Filling Department for January. If an amount is zero, enter \"0\". If required, round your cost per equivalent unit answers to two decimal places.

Total costs assigned by the Filling Department

2. Journalize the entries for (1) costs transferred from Reaction to Filling and (2) the cost transferred from Filling to Finished Goods.

3. Determine the increase or decrease in the cost per equivalent unit from December to January 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).

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.

$

Work in Process—Filling Department
(2,700 units, 80% completed):
	Direct materials (2,700 x $10.5)	$28,350
	Conversion (2,700 x 80% x $6.7)	14,472
	$42,822

Solution

FIFO method Beggining units 2700 Transferred out 34,500 Started into production 34800 Ending units 3,000 37500 37500 Equivalent units Material Conversion Beginning units 2700 2700 Completion in current period 0% 20% A 0 540 Units started and completed 31800 31800 Completion 100% 100% B 31800 31800 Ending Units 3,000 3,000 Completion 100% 10% C 3000 300 Total units A+B+C 34800 32640 Cost per equivalent units Per unit cost Cost Total units Per unit cost Material cost 354960 34800 10.20 Conversion cost 231744 32640 7.10 Total 586704 17.30 Cost of goods sold Material convertion cost Beginning work in progress A 28350 14472 42822 Beginning inventory completed Completion 0% 20% Per unit cost 10.20 7.10 Units 2700 2700 Total cost   B 0 3834 3834 Units started and completed Completion 100% 100% Per unit cost 10.20 7.10 Units 31800 31800 Total cost    C 324360 225780 550140 Total cost A+B+C 352710 229614 596796 Ending work in progress Completion 100% 10% Per unit cost 10.20 7.10 Units 3,000 3,000 Total cost     30600 2130 32730 Total cost accounted for 629526 Cost per equivalent unit Material Conversion cost For current period 10.20 7.10 For beginning inventory 10.5 6.70 increase (decrease) -0.3 0.400