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., 5,700 units, 20% completed					17,328
	31	Direct materials, 30,400 units	57,760				75,088
	31	Direct labor	17,110				92,198
	31	Factory overhead	9,626				101,824
	31	Goods transferred, 33,900 units			?		?
	31	Bal., 2,200 units, 30% completed					?

a1. Prepare the March journal entry for the Papermaking Department for the materials charged to production.

a2. Prepare the March journal entry for the Papermaking Department for the conversion costs charged to production. If an amount box does not require an entry, leave it blank.

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.

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.
$

Fifo

Answer 1

A)

Date	Account title	Debit	credit
a-1	Work in process	57,760
	Raw material inventory		57,760
	[being material charged to production]
a-2	Work in process	26736
	Factory labor		17110
	manufacturing overhead		9626
	[Being conversion cost incurred]
a-3	Finished goods inventory	97116
	work in process		97116

**FIFO methof for equivalent unit :

	Material	conversion
Beginning WIP	0	4560      [5700(1-.20 Completed )]
units started and completed out [339005=- 5700from beginning WIP	28200	28200
Ending WIP	2200	660      [2200*30%]
Equivalent unit [A]	30400	33420
cost incurred during the period [B]	57760	17110+9626=26736
cost per equivalent unit [B/A]	1.9	.80

cost of unit transfered out
Beginning WIP	17328
cost incurred during the period
Beginning WIP [4560*.80]	3648
Started and completed out [28200*1.9]+[28200*.80]conversion	76140
cost of unit transferedout		97116

b)

Material [2200*1.9]	4180
converison [660*.8]	528
cost of ending WIP /March 31 WIP	4708