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., 2,600 units, 35% completed

9,139

31

Direct materials, 105,000 units

330,750

339,889

31

Direct labor

40,560

380,449

31

Factory overhead

54,795

435,244

31

Goods transferred, 103,900 units

?

?

31

Bal., 3,700 units, 80% completed

?

a1. Prepare the March journal entry for the Papermaking Department for the materials charged to production. If an amount box does not require an entry, leave it blank.

Work in Process-Papermaking Department

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Materials-Pulp

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fill in the blank cd065b051075053_6

Feedback

a1. Remember there are three different types of inventory; materials, work in process, and finished goods.

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.

Work in Process-Papermaking Department

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Wages Payable

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Factory Overhead

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fill in the blank 81da3802bfd002f_9

Feedback

a2. What types of costs are included in conversion costs? By adding these conversion costs are the units complete and ready for transfer?

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. If an amount box does not require an entry, leave it blank.

Work in Process-Converting Department

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fill in the blank 0d9598f6dff6005_3

Work in Process-Papermaking Department

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Feedback

a3. Remember that each department has a work in process account. Are these units 100% complete and ready to be sold or are they still in process?

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.

$

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Answer 1

a1
Work in process-Papermaking Department	330750
Materials		330750
a2
Work in process-Papermaking Department	95355
Wages payable		40560
Factory Overhead		54795
a3
Work in process-Converting Department	420925
Work in process-Papermaking Department		420925
b
Work in process-Papermaking Department balance	14319

Workings:
Units charged to production:
Inventory in process, March 1			2600
Received from materials storeroom			105000
Total units accounted for by the Papermaking Department			107600
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, March 1	2600	0	1690
Started and completed in March	101300	101300	101300
Transferred to Converting Department in March	103900	101300	102990
Inventory in process, March 31	3700	3700	2960
Total units to be assigned costs	107600	105000	105950
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for March in Papermaking Department		330750	95355
Total equivalent units		105000	105950
Cost per equivalent unit		3.15	0.90
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, March 1			9139
Costs incurred in March			426105
Total costs accounted for by the Papermaking Department			435244
Cost allocated to completed and partially completed units:
Inventory in process, March 1 balance			9139
To complete inventory in process, March 1	0	1521	1521
Cost of completed March 1 work in process			10660
Started and completed in March	319095	91170	410265
Transferred to Converting Department in March			420925
Inventory in process, March 31	11655	2664	14319
Total costs assigned by the Papermaking Department			435244