Required: a. On March 31, prepare the following journal entries for the Papermaking Department:* 1. The materials charged to production 2. The conversion costs charged to production 3. The completed production transferred to the Converting Department +b. Determine the Work in Process-Papermaking Department March 31 balance.
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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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- Dublin Brewing Co. uses the process cost system. The following data, taken from the organizations books, reflect the results of manufacturing operations during October: Production Costs Work in process, beginning of period: Costs incurred during month: Production Data: 13,000 units finished and transferred to stockroom Work in process, end of period, 2,000 units one-half completed Required: Prepare a cost of production summary for October.Equivalent units and related costs; cost of production report; entries Dover Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling departments, emerging as finished chemicals. The balance in the account Work in ProcessFilling was as follows on January 1: The following costs were charged to Work in ProcessFilling during January: During January, 53,000 units of specialty chemicals were completed. Work in ProcessFilling Department on January 31 was 2,700 units, 30% completed. Instructions 1. Prepare a cost of production report for the Filling Department for January. 2. Journalize the entries for costs transferred from Reaction to Filling and the costs transferred from Filling to Finished Goods. 3. Determine the increase or decrease in the cost per equivalent unit from December to January for direct materials and conversion costs. 4. Discuss the uses of the cost of production report and the results of part (3).Work in process account data for two months; cost of production reports Hearty Soup Co. uses a process cost system to record the costs of processing soup, which requires the cooking and filling processes. Materials are entered from the cooking process at the beginning of the filling process. The inventory of Work in ProcessFilling on April 1 and debits to the account during April were as follows: During April, 800 units in process on April 1 were completed, and of the 7,800 units entering the department, all were completed except 550 units that were 90% completed. Charges to Work in ProcessFilling for May were as follows: During May, the units in process at the beginning of the month were completed, and of the 9,600 units entering the department, all were completed except 300 units that were 35% completed. Instructions 1. Enter the balance as of April 1, in a four-column account for Work in ProcessFilling. Record the debits and the credits in the account for April. Construct a cost of production report, and present computations for determining (A) equivalent units of production for materials and conversion, B) costs per equivalent unit, (C) cost of goods finished, differentiating between units started in the prior period and units started and finished in April, and (d) work in process inventory. 2. Provide the same information for May by recording the May transactions in the four-column work in process account. Construct a cost of production report, and present the May computations (A through D) listed in part (1). 3. Comment on the change in costs per equivalent unit for March through May for direct materials and conversion costs.
- Holmes Products, Inc., produces plastic cases used for video cameras. The product passes through three departments. For April, the following equivalent units schedule was prepared for the first department: Costs assigned to beginning work in process: direct materials, 90,000; conversion costs, 33,750. Manufacturing costs incurred during April: direct materials, 75,000; conversion costs, 220,000. Holmes uses the weighted average method. Required: 1. Compute the unit cost for April. 2. Determine the cost of ending work in process and the cost of goods transferred out.Kokomo Kayak Inc. uses the process cost system. The following data, taken from the organizations books, reflect the results of manufacturing operations during the month of March: Production Costs Work in process, beginning of period: Costs incurred during month: Production Data: 18,000 units finished and transferred to stockroom. Work in process, end of period, 3,000 units, two-thirds completed. Required: Prepare a cost of production summary for March.Chrome Solutions Company manufactures special chromed parts made to the order and specifications of the customer. It has two production departments, Stamping and Plating, and two service departments, Power and Maintenance. In any production department, the job in process is wholly completed before the next job is started. The company operates on a fiscal year, which ends September 30. Following is the post-closing trial balance as of September 30: Additional information: The balance of the materials account represents the following: The company uses the FIFO method of accounting for all inventories. Material A is used in the Stamping Department, and materials B and C are used in the Plating Department. The balance of the work in process account represents the following costs that are applicable to Job 905. (The customer’s order is for 1,000 units of the finished product.) The finished goods account reflects the cost of Job 803, which was finished at the end of the preceding month and is awaiting delivery orders from the customer. At the beginning of the year, factory overhead application rates were based on the following data: In October, the following transactions were recorded: Purchased the following materials and supplies on account: The following materials were issued to the factory: Customers’ orders covered by Jobs 1001 and 1002 are for 1,000 and 500 units of finished product, respectively. Factory wages and office, sales, and administrative salaries are paid at the end of each month. (Assume FICA and federal income tax rates of 8% and 10%, respectively.) Record the company’s liability for state and federal unemployment taxes. (Assume rates of 4% and 1%, respectively, and that none of the employees had reached the $8,000 limit.) Record the payroll distribution for October. Wages of the supervisors, custodial personnel, etc., totaled $9,500; administrative salaries were $18,300. Miscellaneous factory overhead incurred during October totaled $4,230. Miscellaneous selling and administrative expenses were $1,500. These items as well as the FICA tax and federal income tax withheld for September were paid. (See account balances on the post-closing trial balance for September 30.) Annual depreciation on plant assets is calculated using the following rates (round to nearest dollar): Factory buildings–5% Machinery and equipment–20% Office equipment–20% The balance of the prepaid insurance account represents a three-year premium for a fire insurance policy covering the factory building and machinery. It was paid on the last day of the preceding month and became effective on October 1. The summary of factory overhead prepared from the factory overhead ledger is reproduced here: The total expenses of the Maintenance Department are distributed on the basis of floor space occupied by the Power Department (8,820 sq ft), Stamping Department (19,500 sq ft), and Plating Department (7,875 sq ft). The power department expenses are then allocated equally to the Stamping and Plating departments. After the actual factory overhead expenses have been distributed to the departmental accounts and the applied factory overhead has been recorded and posted, any balances in the departmental accounts are transferred to Under- and Overapplied Overhead. Jobs 905 and 1001 were finished during the month. Job 1002 is still in process at the end of the month. During the month, Jobs 803 and 905 were sold with a mark-on percentage of 50% on cost. Received $55,500 from customers in payment of their accounts. Checks were issued in the amount of $43,706 for payment of the payroll. Required: Set up the beginning trial balance in T-accounts. Prepare materials inventory ledger cards and enter October 1 balances. Prepare a Payroll Summary and Schedule of Earnings and Payroll Taxes for the month of October. Set up job cost sheets as needed. Record all transactions and related entries for October and post to T-accounts. Prepare a service department expense distribution worksheet for October. At the end of the month: Analyze the balance in the materials account, the work in process account, and the finished goods account. Prepare the statement of cost of goods manufactured for the month ended October 31.
- Lighthouse Paper Company manufactures newsprint. The product is manufactured in two departments, Papermaking and Converting. Pulp is first placed into a vessel at the beginning of papermaking production. The following information concerns production in the Papermaking Department for March. Account Work in Process—Papermaking Department Account No. Date Item Debit Credit Balance Debit Credit Mar. 1 Bal., 5,900 units, 10% completed 14,868 31 Direct materials, 31,500 units 44,100 58,968 31 Direct labor 13,460 72,428 31 Factory overhead 7,570 79,998 31 Goods transferred, 35,200 units ? ? 31 Bal., 2,200 units, 20% completed ?Lighthouse Paper Company manufactures newsprint. The product is manufactured in two departments, Papermaking and Converting. Pulp is first placed into a vessel at the beginning of papermaking production. The following information concerns production in the Papermaking Department for March: Attachment a. Prepare the following March journal entries for the Papermaking Department:1. The materials charged to production2. The conversion costs charged to production3. The completed production transferred to the Converting Departmentb. Determine the Work in Process—Papermaking Department March 31 balance.White Diamond Flour Company manufactures flour by a series of three processes, beginning with wheat grain being introduced in the Milling Department. From the Milling Department, the materials pass through the Sifting and Packaging departments, emerging as packaged refined flour. The balance in the account Work in Process—Sifting Department was as follows on July 1:Work in Process—Sifting Department (900 units, 3/5 completed) on July 1Cost Source Dollar AmountDirect Materials (900 x $3.15) $2,835Conversion (900 x 3/5 x $0.30) 162Total Materials and Conversion 2,997The following costs were charged to Work in Process—Sifting Department during July:Work in Process—Sifting DepartmentCost Source Dollar AmountDirect materials transferred from Milling Department: 15,700 units at $2.30 a unit $36,110Direct Labor 5,420Factory Overhead 2,384During July, 15,500 units of flour were completed. Work in Process—Sifting Department on July 31 was 1,100 units, 4/5 completed.Instructionsa. Prepare a cost…
- Friedman Company has a production process that involves three processes. Units move through the processes in this order: cutting, stamping, and then polishing. The company had the following transactions in November: View the transactions. Prepare the joumal entries for Friedman Company. (Record debits first, then credits. Exclude explanations from journal entries.) 1. Cost of units completed in the Cutting Department, $14,000 Date Nov. 30 Accounts Debit Credit Transactions 1. Cost of units completed in the Cutting Department, $14,000 2. Cost of units completed in the Stamping Department, $28,000 $39,000 3. Cost of units completed in the Polishing Department, 4. Sales on account, $40,000 5. Cost of goods sold is 80% of sales - XThe following information concerns production in the Baking Department for March. All direct materials are placed in process at the beginning of production. placed in process at the beginning of production. a. Determine the number of units in work in process inventory at March 31.units b. Determine the equivalent units of production for direct materials and conversion costs in March. ACCOUNT Work in Process—Baking Department ACCOUNT NO. Date Item Debit Credit Balance Debit Credit Mar. 1 Bal., 18,000 units, 1?4 completed 14,760 31 Direct materials, 336,000 units 252,000 266,760 31 Direct labor 40,000 306,760 31 Factory overhead 60,530 367,290 31 Goods finished, 330,000 units 346,410 20,880 31 Bal. ? units, 2/5 completed 20,880Shirley Processing. Incorporated (SPI) makes adhesive tape. The following information on the physical flow of units and costs for month of March: Quantities Beginning work-in-process Started To account for Transferred out Ending work in process Accounted for Cost Beginning work-in-process Current period Total Physical 108,000 957,588 1,065,500 976,588 89,000 1,065,508 Total $ 188,570 1,891,498 $ 2,088,068 Equivalent units Percentage Complete Conversion 48% Materials 100% 100% 100% Required A Direct Materials $ 168,180 1,244,750 $ 1,412,938 Required: a. Compute the equivalent units for the conversion cost calculation for March assuming Shirley Processing, Incorporated uses the weighted-average method. b. Compute the cost per equivalent unit for direct materials and conversion costs for March assuming Shirley Processing, Incorporated uses the weighted-average method. Complete this question by entering your answers in the tabs below. 100% 28% Conversion $ 28,390 646,748 $ 667,138 Required…