Question

Gonzalez Tortilla Corporation produces tortillas in large batches and uses a process costing system. Three departments—Mixing, Rolling, and Packaging—are involved in the production process. Gonzalez Tortilla has the following transactions:

1. Direct materials totaling $25,000—$7,500 for the Mixing department, $6,250 for the Rolling department, and $11,250 for the Packaging department—are requisitioned and placed in production.
2. Each production department incurs the following direct labor costs (wages payable):

Mixing	$3,125
Rolling	$5,750
Packaging	$2,750

3. Manufacturing overhead costs are applied to each department as follows:

Mixing	$12,500
Rolling	$8,750
Packaging	$9,375

4. Products with a cost of $6,875 are transferred from the Mixing department to the Rolling department.
5. Products with a cost of $8,000 are transferred from the Rolling department to the Packaging department.
6. Products with a cost of $11,375 are completed and transferred from the Packaging department to the finished goods warehouse.
7. Products with a cost of $10,375 are sold to customers.

Perform the following steps for each transaction:

1. Prepare a journal entry to record the transaction.
2. Summarize the flow of costs through T-accounts (no need to include T-accounts for raw materials inventory, wages payable, or manufacturing overhead). Assume that there are no beginning balances in the work-in-process inventory, finished goods inventory, and cost of goods sold accounts.

Answer 1