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, 52,400 units of specialty chemicals were completed. Work in Process—Filling Department on January 31 was 4,600 units, 30% 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.

$

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
(4,100 units, 80% completed):
	Direct materials (4,100 x $17.2)	$70,520
	Conversion (4,100 x 80% x $11.2)	36,736
	$107,256

Solution

FIFO method Beggining units 4100 Transferred out 52,400 Started into production 52900 Ending units 4,600 57000 57000 Equivalent units Material Conversion Beginning units 4100 4100 Completion in current period 0% 20% A 0 820 Units started and completed 48300 48300 Completion 100% 100% B 48300 48300 Ending Units 4,600 4,600 Completion 100% 30% C 4600 1380 Total units A+B+C 52900 50500 Cost per equivalent units Per unit cost Cost Total units Per unit cost Material cost 894010 52900 16.90 Conversion cost 580750 50500 11.50 Total 1474760 28.40 Cost of goods sold Material convertion cost Beginning work in progress A 70520 36736 107256 Beginning inventory completed Completion 0% 20% Per unit cost 16.90 11.50 Units 4100 4100 Total cost   B 0 9430 9430 Units started and completed Completion 100% 100% Per unit cost 16.90 11.50 Units 48300 48300 Total cost    C 816270 555450 1371720 Total cost A+B+C 886790 564880 1488406 Ending work in progress Completion 100% 30% Per unit cost 16.90 11.50 Units 4,600 4,600 Total cost     77740 15870 93610 Total cost accounted for 1582016 Cost per equivalent unit Material Conversion cost For current period 16.90 11.50 For beginning inventory 17.2 11.20 increase (decrease) -0.3 0.300