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Chapter 18: Q.18-5TI (page 986)

Question: Castillo Company has three departments: Mixing, Bottling, and Packaging. At the end of the month, the production cost reports for the departments show the costs of the products completed and transferred were \(75,000 from Mixing to Bottling, \)50,000 from Bottling to Packaging, and $65,000 from Packaging to Finished Goods Inventory. Prepare the journal entries for the transfer of the costs.

Short Answer

Expert verified

Answer

Date

Particulars

Debit ($)

Credit ($)

1.

Work in process inventory-Bottling

75,000

Work in process inventory-mixing

75,000

2.

Work in process inventory-packaging

50,000

Work in process inventory-Bottling

50,000

3.

Finished goods inventory

65,000

Work in process inventory-packaging

65,000

Step by step solution

01

Transferring of under processing units from one depart to oter department

The units under processing is transferred from one department to other department by debiting the recieiving department WIP account and by crediting the transferring department WIP account.

02

Transferring of WIP account to finished goods inventory

When the WIP inventory are completely processed and ready for sale, it is transferred to the finished goods inventory account by debiting the finished goods inventory account and by crediting the work in process inventory account.

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Most popular questions from this chapter

Collins Company has the following data for the Assembly Department for August:

Unit in process at the beginning of august

900

Units started in august

2,000

Units completed and transferred

2,100

Units in process at the end of august

800

Conversion costs are added evenly throughout the process. The company uses the weighted-average method. Compute the equivalent units of production for direct materials and conversion costs for each independent scenario:

1. Units in process at the end of August are 20% complete; materials are added at the beginning of the process.

2. Units in process at the end of August are 80% complete; materials are added at the beginning of the process.

3. Units in process at the end of August are 20% complete; materials are added at the end of the process.

4. Units in process at the end of August are 80% complete; materials are added at the halfway point.

Color Explosion prepares and packages paint products. Color Explosion has two departments: Blending and Packaging. Direct materials are added at the beginning of the blending process (dyes) and at the end of the packaging process (cans). Conversion costs are added evenly throughout each process. The company uses the weighted- average method. Data from the month of May for the Blending Department are as follows:

Gallons

Beginning work-in-process inventory

0 gallons

Started in production

8,500 gallon

Completed and transferred out to packaging in may

6,500 gallon

Ending work-in-process inventory (30% of the way through the blending process)

2,000 gallon

Costs

Beginning work-in-process inventory

\(0

Costs added during May:

  • Direct materials

5,525

  • Direct labor

1,500

  • Manufacturing overhead allocated

2,547

Total costs added during May

\)9,572

Requirements

1. Compute the Blending Department鈥檚 equivalent units of production for direct

materials and for conversion costs.

2. Compute the total costs of the units (gallons)

a. completed and transferred out to the Packaging Department.

b. in the Blending Department ending Work-in-Process Inventory.

Shea Winery in Pleasant Valley, New York, has two departments: Fermenting and Packaging. Direct materials are added at the beginning of the fermenting process (grapes) and at the end of the packaging process (bottles). Conversion costs are added evenly throughout each process. The company uses the weighted-average method. Data from the month of March for the Fermenting Department are as follows:

Gallons

Beginning work-in-process inventory

500 gallons

Started in production

8,600 gallon

Completed and transferred out to packaging in march

7,900 gallon

Ending work-in-process inventory (80% of the way through the blending process)

1,200 gallon

Costs

Beginning work-in-process inventory

  • Direct materials

\(540

  • Direct labor

195

  • Manufacturing overhead allocated

210

Cost added during march

  • Direct materials

9,288

  • Direct labor

3,305

  • Manufacturing overhead allocated

3,378

Total cost added during march

\)15,971

Requirements

1. Compute the Fermenting Department鈥檚 equivalent units of production for direct

materials and for conversion costs.

2. Compute the total costs of the units (gallons)

a. completed and transferred out to the Packaging Department.

b. in the Fermenting Department ending Work-in-Process Inventory.

Ocean Worthy uses three processes to manufacture lifts for personal watercraft: forming a lift鈥檚 parts from galvanized steel, assembling the lift, and testing the completed lift. The lifts are transferred to Finished Goods Inventory before shipment to marinas across the country.

Ocean Worthy鈥檚 Testing Department requires no direct materials. Conversion costs are incurred evenly throughout the testing process. Other information follows for the month of August:

UNITS

Beginning work-in-process inventory

2,000 units

Transferred in from assembling department during the period

7,000 units

Completed during the period

4,000 units

Ending work in process inventory (40% complete for conversion work)

5,000 units

COSTS

Beginning work in process inventory (transferred in costs, \(93,400, conversion costs, \)18,100)

$111,500

Transferred in from the assembly department during the period

672,000

Conversion cost added during the period

54,000

The cost transferred into Finished Goods Inventory is the cost of the lifts transferred out of the Testing Department. Ocean Worthy uses weighted-average

process costing.

Requirements

1. Prepare a production cost report for the Testing Department.

2. What is the cost per unit for lifts completed and transferred out to Finished Goods Inventory? Why would management be interested in this cost?

Question: Cadwell manufactures cell phones. The conversion costs to produce cell phones for November are added evenly throughout the process in the Assembly Department. The company uses the weighted-average method. For each of the following separate assumptions, calculate the equivalent units of production for conversion costs in the ending Work-in-Process Inventory for the Assembly Department:

1. 12,000 cell phones were 60% complete

2. 21,000 cell phones were 40% complete
See all solutions

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