# 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 \$1,880

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.

 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. 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).

 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 48071
 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

3.

 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

2

Journal entries

Work in progress Packaging department Debit 46066

Work in progress Sifting department credit 46066

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