Question

Cost of Production and Journal Entries

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., 8,500 units, 20% completed					23,120
	31	Direct materials, 45,300 units	77,010				100,130
	31	Direct labor	22,340				122,470
	31	Factory overhead	12,562				135,032
	31	Goods transferred, 50,600 units			?		?
	31	Bal., 3,200 units, 30% completed					?

a3. Prepare the March journal entry for the Papermaking Department for the completed production transferred to the Converting Department. If required, round your interim calculations to two decimal places and your final answer to the nearest dollar.

	Work in Process-Converting Department
	Work in Process-Papermaking Department

Feedback

b. Determine the Work in Process—Papermaking Department March 31 balance. If required, round your interim calculations to two decimal places and your final answer to the nearest dollar.
$

Answer 1

		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, March 1	8500	0	6800
Started and completed in March	42100	42100	42100
Transferred to Converting Department   in March	50600	42100	48900
Inventory in process, March 31	3200	3200	960
Total units to be assigned costs	53800	45300	49860
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for March in Papermaking Department		77010	34902
Total equivalent units		45300	49860
Cost per equivalent unit		1.70	0.70
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, March 1			23120
Costs incurred in March			111912
Total costs accounted for by the Papermaking Department			135032
Cost allocated to completed and partially completed units:
Inventory in process, March 1 balance			23120
To complete inventory in process, March 1	0	4760	4760
Cost of completed March 1 work in process			27880
Started and completed in March	71570	29470	101040
Transferred to Converting Department   in March			128920
Inventory in process, March 31	5440	672	6112
Total costs assigned by the Papermaking Department			135032
a3
Work in Process-Converting Department	128920
Work in Process-Papermaking Department		128920
a4
Work in Process—Papermaking Department March 31 balance	6112