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 1,200 pounds of alloy in process, which were 40% complete as to conversion. The Work in Process balance for these 1,200 pounds was $173,280, determined as follows:

Direct materials (1,200 x $140)	$168,000
Conversion (1,200 x 40% x $11)	5,280
	$173,280

During May, the Casting Department was charged $1,536,800 for 11,300 pounds of alloy and $45,560 for direct labor. Factory overhead is applied to the department at a rate of 150% of direct labor. The department transferred out 11,600 pounds of finished castings to the Machining Department. The May 31 inventory in process was 30% 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. Round all amounts to the nearest whole dollar.

	Work in Process-Casting Department
	Wages Payable
	Factory Overhead

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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

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

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	$
Change in conversion	Decrease	$

Answer 1

a.     1.   Work in Process—Casting Department...........................         1,536,800

                    ........................................................... Materials—Alloy                                                      1,536,800

        2.   Work in Process—Casting Department...........................            113,900

                    .............................................................. Wages Payable                                                      45,560

                    ......................................................... Factory Overhead                                                   68,340*

                    *$45,560 × 150%

        3.   Work in Process—Machining Department......................         1,699,770*

                    ..................... Work in Process—Casting Department                                                1,699,770

                    *Supporting calculations:

                    Cost of 11,600 transferred-out pounds:

                    Inventory in process, October 1..........................................................         $ 173,280

                    Cost to complete October 1 inventory:

                    ................................ 720 pounds × $10.08lb. (see calculations below)                              7,257.60

              Pounds started and completed in October
[10,400 lbs. × ($136 + $10.08)].............................................................         1,519,232

              Transferred to Machining Department....................................................       $1,699,770

              Supporting equivalent unit and cost per equivalent unit calculations:

	A	B	C	D
			Equivalent Units
		Whole Units	Materials	Conversion
1	Inventory in process, October 1 (40% completed)	1200	—	7201	1
2	Started and completed in October	10,400	10,400	10,400	2
3	Transferred to Machining Department in October	11,600	10,400	11,120	3

b.    $125121.60; determined as follows:

              Direct materials (900 × $136).............................................          $ 122400

              Conversion (900 × 30% × $10.08).....................................          2721.60

                                                                                                                     $ 125121.60