Question

Birch PaperBirch Paper

Co. produces the paper used by wallpaper manufacturers.

BirchBirch​'s

​four-stage process includes​ mixing, cooking,​ rolling, and cutting.

On

MarchMarch

​1, the Mixing Department had

550550

rolls of paper in process. During

MarchMarch​,

the Mixing Department completed the mixing process for those

550

rolls and also started and completed the mixing process for an additional

3,850

rolls of paper. The department started but did not finish the mixing process for an additional

500

​rolls, which were

20 %

complete with respect to both direct materials and conversion work at the end of

MarchMarch.

Direct materials and conversion costs are incurred evenly throughout the mixing process.

The Mixing Department compiled the following data for March​:

Direct		Direct		Manufacturing		Total
	Materials		Labor		Overhead Allocated		Costs
Beginning inventory, Mar. 1	$360		$515		$230		$1,105
Costs added during March	5,490		3,265		3,640		12,395
Total costs	$5,850		$3,780		$3,870		$13,500

1.	Prepare a production cost report for the Mixing Department for March The company uses the​ weighted-average method.
2.	Journalize all transactions affecting the​ company's mixing process during March Assume labor costs are accrued and not yet paid.

Prepare a production cost report for the Mixing Department for

MarchMarch.

The company uses the​ weighted-average method. ​(Round all cost per unit amounts to the nearest cent and all other amounts to the nearest whole dollar. Abbreviation​ used: EUP​ = equivalent units of​ production.)

Birch Paper, Co.
Production Cost Report-Mixing Department
Month Ended March 31
		Equivalent Units
	Physical	Direct	Conversion
UNITS	Units	Materials	Costs
Units to account for:
Total units to account for
Units accounted for:
Total units accounted for

	Direct	Conversion	Total
COSTS	Materials	Costs	Costs
Costs to account for:
Total costs to account for
Cost per equivalent unit

Costs accounted for:
Total costs accounted for

Requirement 2. Journalize all transactions affecting the​ company's mixing process during

MarchMarch.

Assume labor costs are accrued and not yet paid.

Begin with a summary journal entry to record the assignment of direct​ materials, direct​ labor, and the allocation of manufacturing overhead to the Mixing Department. ​(Prepare a single compound journal entry. Record debits​ first, then credits. Exclude explanations from any journal​ entries.)

Date		Accounts	Debit	Credit
Mar.	31

Prepare the journal entry to record the cost of the units completed and transferred out of the Mixing Department.

Date		Accounts	Debit	Credit
Mar.	31

Answer 1

1.

Prepare statement of equivalent units:

Statement showing equivalent unit of production
	Total units	Materials	Conversion
Units to account for:
Opening WIP	550
started	4350
Total	4900
Units accounted for:
Units completed and transferred out (a)		4400	4400
Add: ending WIP		500	500
% of completion		20%	20%
Equivalent units in ending WIP (b)		100	100
Total equivalent units (a + b)		4500	4500

2.

Prepare statement showing total cost:

Production cost report
	Total cost	Materials	Conversion
Units to account for:
Opening WIP	1105	360	745
started	12395	5490	6905
Total	13500	5850	7650
Total units		4500	4500
Cost per unit		1.3	1.7
Units accounted for:
Units completed and transferred out (a)		5720	7480
Add: ending WIP		130	170
Total	13500	5850	7650

Part 2:

Journal entries are as follows:

Account Title and explanation	Debit	Credit
WIP inventory	12395
Raw material inventory		5490
Wages payable		3265
Factory overhead		3640
(To record total cost incurred in the process)
Finished goods inventory	13200
WIP inventory		13200
(To record units transferred to finished goods)