Question

Bavarian 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 October 31, 2014:
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". If required, round your cost per equivalent unit answers to the nearest cent.

Bavarian Chocolate Company

Cost of Production Report-Blending Department

For the Month Ended October 31, 2014

Unit Information
Units charged to production:
Inventory in process, October 1



Received from materials storeroom



Total units accounted for by the Blending Department



Units to be assigned costs:
Equivalent Units

Whole Units

Direct Materials

Conversion

Inventory in process, October 1







Started and completed in October







Transferred to Molding Department in October-







Inventory in process, October 31







Total units to be assigned costs







Cost Information
Costs per equivalent unit:
Direct Materials

Conversion

Total costs for October in Blending Department

$

$

Total equivalent units





Cost per equivalent unit

$

$

Costs charged to production:
Direct Materials

Conversion

Total

Inventory in process, October 1

$

Costs incurred in October



Total costs accounted for by the Blending Department

$

Cost allocated to completed and partially completed units:

Inventory in process, October 1 balance

$

To complete inventory in process, October 1

$



Cost of completed October 1 work in process

$

Started and completed in October

$





Transferred to Molding Department in October

$

Inventory in process, October 31







Total costs assigned by the Blending Department

$



2. Assuming that the October 1 work in process inventory includes direct materials of $38,295, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between September and October. If required, round your answers to two decimal places.

Increase or Decrease Amount
Change in direct materials cost per equivalent unit SelectDecreaseIncreaseCorrect 1 of Item 2 $
Change in conversion cost per equivalent unit SelectDecreaseIncreaseCorrect 3 of Item 2 $

Answer 1

Solution:

Working notes:  

Calculate opening work in process inventory for conversion costs as shown below:  

Opening work in process

inventory for conversion costs  =  1-  $\frac{1}{5}$ = 2/5

= 40 %  

Calculate units started and completed in October as shown below:  

Units started and completed in July = ( Units transferred out — opening work in process inventory  

= 25, 700 units — 2,300 units = 23, 400 units  

Calculate whole ending work in process inventory in October as shown below:  

Opening work in process inventory + Whole ending work in ) = in October process inventory Received from material storeroom — Transferred to packing department  )  

= 2,300 units + 26,000 units — 25, 700 units = 2, 600 units  

Calculate ending work in process inventory for conversion costs as shown below:  

Ending work in process inventory for conversion costs  )  

(Total units for ending work in process inventory x Completed percent for conversion costs = 2, 600 units x 1 = 520 units  )  

Equivalent units for production is calculated by adding units of opening work in process inventory, transferred to finished goods in October, and units for ending work in process inventory. Therefore, an equivalents unit for production for direct materials is 26,000 units and equivalent units for production for conversion costs is 24,840 units.  

Calculate direct materials and conversion cost equivalent cost per unit for October as shown below:  

Direct material cost per unit — Total direct material costs  Equivalent units for direct materials 8429,000  — 26,000 units = $16.50 Per unit  

Conversion cost per unit — Total conversion costs  Eqtuv' aka! units for conversion $149,040 — 24,840 units  

                     = $6