Chapter 18: Q,18-19RQ (page 1006)
Question: Department 1 is transferring units that cost $40,000 to Department 2. Give the journal entry.
Answer
Date | Particulars | Debit ($) | Credit ($) |
Work in process inventory-Department 2 | 40,000 | ||
Work in process inventory-Department 1 | 40,000 |
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Describe the three groups of units that must be accounted for when using the FIFO method.
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.
Question: Spring Fresh produces premium bottled water. Spring Fresh purchases artesian water, stores the water in large tanks, and then runs the water through two processes: filtration and bottling.
During February, the filtration process incurred the following costs in processing
200,000 liters:
Wages of workers operating filtration equipment | $34,950 |
Manufacturing overhead allocated to filtration | 19,050 |
Water | 110,000 |
Spring Fresh had no beginning Work-in-Process Inventory in the Filtration Department in February.
Requirements
1. Use the FIFO method to compute the February conversion costs in the Filtration Department.
2. The Filtration Department completely processed 200,000 liters in February. Use
the FIFO method to determine the filtration cost per liter.
Smith Paper Co. produces the paper used by wallpaper manufacturers. Smith’s four-stage process includes mixing, cooking, rolling, and cutting. On March 1, the Mixing Department had 400 rolls in process. During March, the Mixing Department completed the mixing process for those 400 rolls and also started and completed the mixing process for an additional 4,100 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 compiled the following data for March:
Direct materials | Direct labor | Manufacturing overhead allocated | Total costs | |
Beginning inventory, Mar. 1 | \(475 | \)275 | \(300 | \)1,050 |
Costs added during March | 5,045 | 2,900 | 2,965 | 10,910 |
Total costs | \(5,520 | \)3,175 | \(3,265 | \)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.
Question: Mayhem Electronics makes game consoles in three processes: assembly, programming, and packaging. Direct materials are added at the beginning of the assembly process. Conversion costs are incurred evenly throughout the process. The Assembly Department had no Work-in-Process Inventory on March 31. In mid-April, Mayhem Electronics started production on 99,000 game consoles. Of this number, 95,000 game consoles were assembled during April and transferred out to the Programming Department. The April 30 Work-in-Process Inventory in the Assembly Department was 45% of the way through the assembly process. Direct materials costing \(301,950 were placed in production in Assembly during April, direct labor of \)100,960 was assigned, and manufacturing overhead of $136,200 was allocated to that department.
Requirements
1. Prepare a production cost report for the Assembly Department for April. The
company uses the weighted-average method.
2. Prepare a T-account for Work-in-Process Inventory—Assembly to show its activity during April, including the April 30 balance.
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