Roan Paper Co. produces the paper used by wallpaper manufacturers. Roan’s four-stage process includes mixing, cooking, rolling, and cutting. On March 1, the Mixing Department had 300 rolls of paper in process. During March, the Mixing Department completed the mixing process for those 300 rolls and also started and completed the mixing process for an additional 4,200 rolls of paper. The department started but did not finish the mixing process for an additional 500 rolls, which were 20% complete with respect to both direct materials and conversion work at the end of March. Direct materials and conversion costs are

incurred evenly throughout the mixing process.

The Mixing Department compiledthe following data for March:

	Direct materials	Direct labor	Manufacturing overhead allocated	Total costs
Beginning inventory, Mar. 1	\(350	\)245	\(200	\)795
Costs added during March	4,940	3,000	3,225	11,165
Total costs	\(5,290	\)3,245	\(3,425	\)11,960

Requirements

1. Prepare a production cost report for the Mixing Department for March. The company uses the weighted-average method.

2. Journalize all transactions affecting the company’s mixing process during March. Assume labor costs are accrued and not yet paid.

Step by step solution

01

Step-by-Step Solution:Step 1: Production Cost Report

Production cost report is prepared by the companies using the process costing system while determining the total manufacturing cost. It shows the detailed costing of the products.

02

Equivalent unit of production for direct material

$$\begin{gathered} \mathbf{EUP}\mathbf{}\mathbf{for}\mathbf{}\mathbf{direct}\mathbf{}\mathbf{material}\mathbf{=}(\mathbf{Completed}\mathbf{}\mathbf{units}\mathbf{\times }\mathbf{Completion}\mathbf{\%})\mathbf{+}(\mathbf{Ending}\mathbf{}\mathbf{WIPunits}\mathbf{\times }\mathbf{Completion}\mathbf{\%}) \\ \mathbf{=}(\mathbf{4}\mathbf{,}\mathbf{500}\mathbf{\times }\mathbf{100}\mathbf{\%})\mathbf{+}(\mathbf{100}\mathbf{\times }\mathbf{20}\mathbf{\%}) \\ \mathbf{=}\mathbf{4}\mathbf{,}\mathbf{600} \end{gathered}$$

03

Equivalent unit of production for conversion costs

$$\begin{gathered} \mathbf{EUP}\mathbf{}\mathbf{for}\mathbf{}\mathbf{Conversion}\mathbf{}\mathbf{cost}\mathbf{=}(\mathbf{Completed}\mathbf{}\mathbf{units}\mathbf{\times }\mathbf{Completion}\mathbf{\%})\mathbf{+}(\mathbf{EndingWIPunits}\mathbf{\times }\mathbf{Completion}\mathbf{\%}) \\ \mathbf{=}(\mathbf{4}\mathbf{,}\mathbf{500}\mathbf{\times }\mathbf{100}\mathbf{\%})\mathbf{+}(\mathbf{100}\mathbf{\times }\mathbf{20}\mathbf{\%}) \\ \mathbf{=}\mathbf{4}\mathbf{,}\mathbf{600} \end{gathered}$$

04

Journal entries

Date	Particulars	Debit ($)	Credit ($)
1.	WIP Inventory-Mixing department	4,940
	Raw material		4,940
2.	WIP inventory-Mixing department	3,000
	Wages payable		3,000
3.	WIP inventory – mixing department	3,225
	Manufacturing overhead		3,225
4.	WIP inventory-cooking department	11,700
	WIP inventory – mixing department		11,700

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