Question

AccuBlade Castings Inc. casts blades for turbine engines. Within the Casting Department, alloy is first melted in a crucible, then poured into molds to produce the castings. On May 1, there were 360 pounds of alloy in process, which were 60% complete as to conversion. The Work in Process balance for these 360 pounds was $50,112, determined as follows:

1	Direct materials (360 × $132)	$47,520.00
2	Conversion (360 × 60% × $12)	2,592.00
3		$50,112.00

During May, the Casting Department was charged $353,600 for 2,600 pounds of alloy and $22,651 for direct labor. Factory overhead is applied to the department at a rate of 150% of direct labor. The department transferred out 2,760 pounds of finished castings to the Machining Department. The May 31 inventory in process was 15% complete as to conversion.

Required:

A.	(1) On May 1, prepare the journal entry for the Casting Department for the materials charged to production.* (2) On May 31, prepare the journal entry for the Casting Department for the conversion costs charged to production.* (3) On May 31, prepare the journal entry for the Casting Department for the completed production transferred to the Machining Department.* * Refer to the Chart of Accounts for exact wording of account titles.
B.	Determine the Work in Process-Casting Department May 31 balance.
C.	Compute and evaluate the change in the costs per equivalent unit for direct materials and conversion from the previous month (April).

Answer 1

A)
a)	Account Titles & explanation	Debit	Credit
	Work in Process—Casting Department	$ 3,53,600.00
	Materials—Alloy		$ 3,53,600.00
b)	Work in Process—Casting Department	$    56,627.50
	Wages Payable		$    22,651.00
	Factory Overhead ($22,651 x 150%)		$    33,976.50
c)	Work in Process—Machining Department	$ 4,32,497.46
	Work in Process—Casting Department		$ 4,32,497.46
	Cost of 2,760 transferred-out pounds:
	Inventory in process, May 1	$    50,112.00
	Cost to complete May 1 inventory (360 x 60% x $21.40)	$      4,622.65
	Pounds started and completed in May [2,400 lbs. × ($136 + $21.40)]	$ 3,77,762.81
	Transferred to Machining Department	$ 4,32,497.46
	Equivalent unit and cost per equivalent unit calculations:
				Equivalent Units
		Physical units	Material	Conversion
	Inventory in process, May 1 (60% completed)	360.00	0.00	216.00
	Started and completed in May (2760 -360)	2400.00	2400.00	2400.00
	Transferred to Machining Department in may	2760.00	2400.00	2616.00
	Inventory in process, May 31 (15% completed) (360+2600-2760)	200.00	200.00	30.00
	Total	2960.00	2600.00	2646.00
	Cost per equivalent unit of materials: = 353600 /2600	136.00	Per Pound
	Cost per equivalent unit of conversion: 56,627.50/2646	21.40	Per pound
B)
	Direct materials (200 × $136)	$    27,200.00
	Conversion (200 × 15% × $21.40)	$         642.04
	Work in Process-Casting Department May 31 balance	$    27,842.04
C)
Materials	From current period	$         136.00
	From beginning inventory	$         132.00
	Increase	$             4.00
Conversion	From current period	$           21.40
	From beginning inventory	$           12.00
	Increase	$             9.40
	The cost per equivalent unit of materials increased by $4 per pound and the cost per equivalent unit of conversion cost increased by $9.40 per pound