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Chapter 18: Q18RQ (page 1006)

Explain the additional journal entries required by process costing systems that are not needed in job order costing systems.

Short Answer

Expert verified

The journal entry which is required in process costing system but not required in the job order costing system is:

Date

Particulars

Debit ($)

Credit ($)

WIP Inventory – Department 1

XXX

WIP Inventory – Department 2

XXX

(Transfer of units from one department to another department)

Step by step solution

01

Step-by-Step Solution:Step 1: Process Costing System

A process costing system is used to determine the manufacturing cost of the product, which passes from more than one process. It determines the cost of manufacturing for every process.

02

The separate journal entry passed in the process costing system

Journal entry passed when the inventory completed in the department transferred to another department. It is recorded by debiting the WIP inventory of the department receiving the units and crediting the WIP inventory of the department transferring the units.

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Most popular questions from this chapter

The Packaging Department started the month with 600 units in process, received 1,200 units from the Finishing Department, and transferred 1,500 units to Finished Goods. Direct materials are added at the beginning of the process and conversion costs are incurred evenly. The units still in process at the end of the month are 60% complete for conversion costs. Calculate the number of units still in process at the end of the month and the equivalent units of production. The company uses the weighted-average method.

What is the purpose of the Costs Accounted For section of the production cost report?

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.

Complete the missing amounts in the following production report. Materials are added at the beginning of the process; conversion costs are incurred evenly; the ending inventory is 60% complete. The company uses the weighted-average method.

NATHAN COMPANY

Production Cost Report – Finishing Department

Month Ended September 30, 2018

Units


Physical units
Equivalent Units
Direct materials
Conversion costs

Units to account for:

  • Beginning work-in-process

500

  • Started in production

2,200

Total units to account for

(a)

Units accounted for:

  • Completed and transferred out

(b)

(d)

(g)

  • Ending work-in-process

500

(e )

(h)

Total units accounted for

(c)

(f)

(i)

COSTS

Direct materials

Conversion costs

Total costs

Cost to account for:

  • Beginning work-in-process

\(1,200

(j)

\)2,140

  • Cost added during period

12,030

8,310

(k)

Total costs to account for

(l)

9,250

22,480

Divided by: Total EUP

(m)

(n)

Cost per equivalent unit

(o)

(p)

Costs accounted for:

  • Completed and transferred out

(q)

(r)

(s)

  • Ending work-in-process

(t)

(u)

(v)

Total cost accounted for

(w)

(x)

$22,480

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.
See all solutions

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