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Q45PGB

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Horngren'S Financial And Managerial Accounting
Found in: Page 1024

Short Answer

Preparing a production cost report, second department, with beginning WIP and transferred in costs; journal entries; FIFO method Work Problem P18-40B using the FIFO method. The Mixing Department beginning work in process of 400 units is 80% complete as to both direct materials and conversion costs. Round equivalent unit costs to four decimal places. Round all other costs to the nearest dollar.

1. Production cost report

Production Cost Report- Department 2
Equivalent unit of production

UNITS

Physical units

Direct material

Conversion costs

Total

Units to account for:

  • Beginning WIP

400

  • Started in production

4,600

Total units to account for

5,000

Units accounted for:

  • Completed and transferred

4,500

4,180

4,180

  • Ending WIP

500

100

100

Total units accounted for

5,000

4,280

4,280

COSTS

Direct material

Conversion costs

Total costs

Costs to account for:

Beginning WIP

$475

$575

$1,050

Cost added during the period

5,045

5,865

10,910

Total cost to account for

5,520

6,440

11,960

Divided by: total EUP

4,280

4,280

Cost per equivalent unit

$1.29

$1.50

Costs accounted for:

  • - Completed and transferred out

5,391

(4,180 x $1.29)

6,290

(4,180x$1.50)

11,681

  • - Ending WIP

129

(100x $1.29)

150

(100x$1.50)

279

Total costs accounted for

5,520

6,440

11,960

2. The journal entries to show the transaction affecting the mixing department are shown in step 4.

See the step by step solution

Step by Step Solution

Step-by-Step Solution:Step 1: Production Cost Report

A production cost report shows the direct material, and the conversion cost separately of a product that involves a certain number of manufacturing processes.

Step 2: Equivalent unit of production for direct material cost

Particulars

EUP

Opening WIP (400 x 20%)

80

Completed and transferred (4,500 – 400) x 100%

4,100

Ending WIP (500 x 20%)

100

Total EUP

4,280

Step 3: Equivalent unit of production for conversion costs

Particulars

EUP

Opening WIP (400 x 20%)

80

Completed and transferred (4,500 – 400) x 100%

4,100

Ending WIP (500 x 20%)

100

Total EUP

4,280

Step 4: Journal Entries

Date

Particulars

Debit ($)

Credit ($)

1.

WIP Inventory-Mixing department

5,045

Raw material

5,045

2.

WIP inventory-Mixing department

2,900

Wages payable

2,900

3.

WIP inventory – mixing department

2,965

Manufacturing overhead

2,965

4.

WIP inventory-cooking department

11,681

WIP inventory – mixing department

11,681

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