Question

I just need A3.

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 900 pounds of alloy in process, which were 60% complete as to conversion. The Work in Process balance for these 900 pounds was $140,940, determined as follows:

Direct materials (900 x $150)	$135,000
Conversion (900 x 60% x $11)	5,940
	$140,940

During May, the Casting Department was charged $1,241,000 for 8,500 pounds of alloy and $34,040 for direct labor. Factory overhead is applied to the department at a rate of 150% of direct labor. The department transferred out 8,700 pounds of finished castings to the Machining Department. The May 31 inventory in process was 50% 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

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. Round all amounts to the nearest whole dollar.

	Work in Process-Casting Department
	Wages Payable
	Factory Overhead

a3. Prepare the May journal entry for the Casting Department for the completed production transferred to the Machining Department. Round all amounts to the nearest whole dollar.

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

b. Determine the Work in Process—Casting Department May 31 balance.
$105,700

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

	Cost per Equivalent Unit
Change in materials	Decrease	$4
Change in conversion	Decrease	$1

Answer 1

Solution :

Accublade Casting INC.
Casting Department
Computation of Equivalent unit (FIFO)
Particulars	Physical units	Material	Conversion
Units to be accounted for:
Beginning WIP Inventory	900
Units started this period	8500
Total unit to be accounted for	9400
Units Accounted for:
Units completed and transferred out
From beginning inventory Material - 0% Conversion - 40%	900	0	360
Started and completed currently	7800	7800	7800
Units in ending WIP Material - 100% Conversion - 50%	700	700	350
Total units accounted for	9400	8500	8510

Accublade Casting INC.
Casting Department
Computation of Cost per Equivalent unit
Particulars	Total cost	Material	Conversion (250% of direct labor cost)
Current period cost	$1,326,100.00	$1,241,000.00	$85,100.00
Equivalent units		8500	8510
Cost per equivalent unit		$146.00	$10.00

Accublade Casting INC.
Casting Department
Producton cost report - FIFO
Particulars	Total cost	Material	Conversion
Cost Accounted for :
Cost assigned to unit transferred out:
Cost from beginning WIP Inventory	$140,940	$135,000	$5,940
Current cost added to complete beginning WIP:
Material	$0	$0
Conversion (360 * $10)	$3,600		$3,600
Total Cost from beginning inventory	$144,540	$135,000	$9,540
Current cost of unit started and completed:
Material (7800*$146)	$1,138,800	$1,138,800
Conversion (7800*$10)	$78,000		$78,000
Total cost of unit started and completed	$1,216,800	$1,138,800	$78,000
Total cost of unit transferred out	$1,361,340	$1,273,800	$87,540
Cost assigned to ending WIP:
Material (700*$146)	$102,200	$102,200
Conversion (350*$10)	$3,500		$3,500
Total ending WIP inventory	$105,700	$102,200	$3,500
Total cost accounted for	$1,467,040	$1,376,000	$91,040

Journal Entries - Accublade Casting INC.
S. No.	Particulars	Debit	Credit
a1	Work In Process - Casting Department Dr	$1,241,000.00
	To Material - Alloy		$1,241,000.00
	(Being material charged to production)
a2	Work In Process - Casting Department Dr	$85,100.00
	To Wages Payable		$34,040.00
	To Factory Overhead (34040*150%)		$51,060.00
	(Being conversion cost charged to production)
a3	Work In Process - Machining Department Dr	$1,361,340.00
	To Work In Process - Casting Department		$1,361,340.00
	(Being cost of goods completed transferred to machining department)

Solution b:

Work In Process - Casting Department May 31 balance = $105,700

Solution c:

Cost per equivalent unit of material in april = $150

Cost per equivalent unit of material in May = $146

Hence 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

Hence change in conversion cost = $11 - $10 = $1 decrease