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Chapter 18: Q.18-7SE (page 1008)

Question: The Finishing Department of Lee and Lewis, Inc., the last department in the manufacturing process, incurred production costs of \(220,000 during the month of June.If the June 1 balance in Work-in-Process Inventory鈥擣inishing is \)0 and the June 30balance is $70,000, what amount was transferred to Finished Goods Inventory?

Short Answer

Expert verified

Answer:

The amount transferred to the finished goods inventory account is $150,000

Step by step solution

01

Finished goods inventory

Finished goods inventory means the inventory which are completed in manufacturing. When the manufacturing process is completed, the WIP inventory balance of the completed goods are transferred to the finished goods inventory account.

02

Amount transferred to the finished goods inventory

Finishedgoodsinventory=BeginingbalanceofWIPInventory+Productioncostincurred-EndingbalanceofWIPInventory=$0+$220,0000-70,000=$150,000

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Most popular questions from this chapter

Rick Pines and Joe Lopez are the plant managers for High Mountain Lumber鈥檚 particle board division. High Mountain Lumber has adopted a just-in-time management philosophy. Each plant combines wood chips with chemical adhesives to produce particle board to order, and all product is sold as soon as it is completed. Laura Green is High Mountain Lumber鈥檚 regional controller. All of High Mountain Lumber鈥檚 plants and divisions send Green their production and cost information. While reviewing the numbers of the two particle board plants, she is surprised to find that both plants estimate their ending Work-in-Process Inventories at 75% complete, which is higher than usual. Green calls Lopez, whom she has known for some time. He admits that to ensure their division would meet its profit goal and that both he and Pines would make their bonus (which is based on division profit), they agreed to inflate the percentage completion. Lopez explains, 鈥淒etermining the percent complete always requires judgment.

Whatever the percent complete, we鈥檒l finish the Work-in-Process Inventory first thing next year.鈥�

Requirements

  1. How would inflating the percentage completion of ending Work-in-Process Inventory help Pines and Lopez get their bonus?
  2. The particle board division is the largest of High Mountain Lumber鈥檚 divisions. If Green does not correct the percentage completion of this year鈥檚 ending Work-in-Process Inventory, how will the misstatement affect High Mountain Lumber鈥檚 financial statements?
  3. Evaluate Lopez鈥檚 justification, including the effect, if any, on next year鈥檚 financial statements.
  4. Address the following: What is the ethical issue? What are the options? What are the potential consequences? What should Green do?

Question: Evergreen Orange manufactures orange juice. Last month鈥檚 total manufacturing costs for the Tampa operation included:

Direct materials

$450,000

Direct labor

32,000

Manufacturing overhead

125,000

What was the conversion cost for Evergreen Orange鈥檚 Tampa operation last month?

Carla Carpet manufactures broadloom carpet in seven processes: spinning, dyeing, plying, spooling, tufting, latexing, and shearing. In the Dyeing Department, direct materials (dye) are added at the beginning of the process. Conversion costs are incurred evenly throughout the process. Information for November 2018 follows:

UNITS

Beginning work-in-process inventory

70 rolls

Transferred in from spinning department during November

550 rolls

Completed during November

480 rolls

Ending work in process inventory (80% complete for conversion work)

140 rolls

COSTS

Beginning work in process inventory (transferred in costs, \(4,000, Materials costs, \)1,400 conversion costs, \(5,300)

\)10,700

Transferred in from the spinning department

23,280

Material costs added during November

14,100

Coversion cost added during November (manufacturing wages, \(8,725; manufacturing overhead allocated, \)43,991)

52,716

Requirements

1. Prepare the November production cost report for Carla鈥檚 Dyeing Department.

The company uses the weighted-average method.

2. Journalize all transactions affecting Carla鈥檚 Dyeing Department during November, including the entries that have already been posted. Assume labor costs are accrued and not yet paid.

Question: What are the four steps in preparing a production cost report?

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.
See all solutions

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