White Diamond Flour Company manufactures flour by a series of three processes, beginning with wheat grain being introduced

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, 2016:

Work in Process-Sifting Department
(800 units,   completed):
Direct materials (800 × $2.05) = $1,640
Conversion (800 ×   × $0.50) = 240

The following costs were charged to Work in Process-Sifting Department during July:

Direct materials transferred from Milling Department:
17,800 units at $2.15 a unit $38,270
Direct labor 4,440
Factory overhead 5,361

During July, 17,100 units of flour were completed. Work in Process-Sifting Department on July 31 was 1,500 units,   completed.

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. Refer to the Chart of Accounts for correct wording of account titles.
3. Determine the increase or decrease in the cost per equivalent unitThe rate used to allocate costs between completed and partially completed production.

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).

Expert Answer

FIFO method
Beggining units 800 Transferred out 17,100
Started into production 17800 Ending units 1,500
18600 18600
Equivalent units Material Conversion
Beginning units 800 800
Completion in current period 0% 40%
A 0 320
Units started and completed 16300 16300
Completion 100% 100%
B 16300 16300
Ending Units 1,500 1,500
Completion 100% 80%
C 1500 1200
Total units A+B+C 17800 17820
Per unit cost Cost Total units Per unit cost
Material cost 38270 17800 2.15
Conversion cost 9801 17820 0.55
Cost of goods sold Material convertion cost
Beginning inventory completed
Completion 0% 40%
Per unit cost 2.15 0.55
Units 800 800
Total cost   A 0.00 176 176
Units started and completed
Completion 100% 100%
Per unit cost 2.15 0.55
Units 16300 16300
Total cost    B 35045 8965 44010
Beginning work in progress C 1880
Total cost A+B+C 46066
Ending work in progress
Completion 100% 80%
Per unit cost 2.15 0.55
Units 1,500 1,500
Total cost 3225 660 3885
Total cost accounted for 49951


Cost per equivalent unit Material Conversion cost
For current period 2.15 0.55
For beginning inventory 2.05 0.50
increase (decrease) 0.1 0.05


Journal entries

Work in progress Packaging department Debit 46066

Work in progress Sifting department credit 46066

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