Natco Aluminum Company uses a process cost system to record the costs of manufacturing rolled aluminum, which consists of the smelting and rolling processes. Materials are entered from smelting at the beginning of the rolling process. The inventory of Work in Process—Rolling on June 1, 2012, and debits to the account during June were as follows:
During June, 3,300 units in process on June 1 were completed, and of the 32,500 units entering the department, all were completed except 3,700 units that were 4/5 completed. Charges to Work in Process—Rolling for July were as follows:
During July, the units in process at the beginning of the month were completed, and of the 33,000 units entering the department, all were completed except 2,900 units that were 2?5 completed.
1. Enter the balance as of June 1, 2012, in a four-column account for Work in Process— Rolling. Record the debits and the credits in the account for June. Construct a cost of production report and present computations for determining (a) equivalent units of production for materials and conversion, (b) costs per equivalent unit, (c) cost of goods finished, differentiating between units started in the prior period and units started and finished in June, and (d) work in process inventory. If an amount box does not require an entry, leave it blank or enter “0″.
2. Provide the same information for July by recording the July transactions in the four-column work in process account. Construct a cost of production report, and present the July computations (a through d) listed in part (1). If an amount box does not require an entry, leave it blank or enter “0″.
3. Comment on the change in costs per equivalent unit for May through July for direct materials and conversion cost.
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