Question

Cost of Production and Journal Entries

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 1,000 pounds of alloy in process, which were 30% complete as to conversion. The Work in Process balance for these 1,000 pounds was $153,300, determined as follows:

Direct materials (1,000 x $150)	$150,000
Conversion (1,000 x 30% x $11)	3,300
	$153,300

During May, the Casting Department was charged $1,372,400 for 9,400 pounds of alloy and $38,160 for direct labor. Factory overhead is applied to the department at a rate of 150% of direct labor. The department transferred out 9,700 pounds of finished castings to the Machining Department. The May 31 inventory in process was 20% complete as to conversion.

a1. Prepare the May journal entry for the Casting Department for the materials charged to production.

	Work in Process-Casting Department
	Materials-Alloy

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

	Work in Process-Casting Department
	Wages Payable
	Factory Overhead-Casting Department

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a3. Prepare the May journal entry for the Casting Department for the completed production transferred to the Machining Department.

	Work in Process-Machining Department
	Work in Process-Casting Department

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b. Determine the Work in Process—Casting Department May 31 balance.
$

c. Compute the change in the costs per equivalent unit for direct materials and conversion from the previous month (April).

	Cost per Equivalent Unit
Change in materials	Decrease	$
Change in conversion	Decrease

Answer 1

a.

b.

WIP - casting department May 31 balance = $103,600

c.

Cost per equivalent unit of material in April = $150

Cost per equivalent unit of material in May = $146

Change in material cost = $150 - $146 = $4 decrease

Cost per equivalent unit of conversion in April = $11

Cost per equivalent unit of conversion in May = $10

Change in conversion cost = $11 - $10 = $1 decrease