Question

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 260 pounds of alloy in process, which were 60% complete as to conversion. The Work in Process balance for these 260 pounds was $37,180, determined as follows:

1	Direct materials (260 × $134)	$34,840.00
2	Conversion (260 × 60% × $15)	2,340.00
3		$37,180.00

During May, the Casting Department was charged $276,000 for 2,000 pounds of alloy and $19,540 for direct labor. Factory overhead is applied to the department at a rate of 150% of direct labor. The department transferred out 2,060 pounds of finished castings to the Machining Department. The May 31 inventory in process was 25% complete as to conversion.

Required:

A.	(1) On May 1, prepare the journal entry for the Casting Department for the materials charged to production.* (2) On May 31, prepare the journal entry for the Casting Department for the conversion costs charged to production.* (3) On May 31, prepare the journal entry for the Casting Department for the completed production transferred to the Machining Department.* * Refer to the Chart of Accounts for exact wording of account titles.
B.	Determine the Work in Process-Casting Department May 31 balance.
C.	Compute and evaluate the change in the costs per equivalent unit for direct materials and conversion from the previous month (April).

CHART OF ACCOUNTS
AccuBlade Castings Inc.
General Ledger
ASSETS 110 Cash 121 Accounts Receivable 125 Notes Receivable 126 Interest Receivable 131 Materials-Alloy 132 Materials-Steel 141 Work in Process-Casting Department 142 Work in Process-Machining Department 151 Factory Overhead-Casting Department 152 Factory Overhead-Machining Department 161 Finished Goods 171 Supplies 172 Prepaid Insurance 173 Prepaid Expenses 181 Land 191 Factory 192 Accumulated Depreciation-Factory LIABILITIES 210 Accounts Payable 221 Utilities Payable 231 Notes Payable 236 Interest Payable 251 Wages Payable EQUITY 311 Common Stock 340 Retained Earnings 351 Dividends 390 Income Summary	REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 520 Wages Expense 531 Selling Expenses 532 Insurance Expense 533 Utilities Expense 534 Supplies Expense 540 Administrative Expenses 561 Depreciation Expense-Factory 590 Miscellaneous Expense 710 Interest Expense

Journal

A(1). On May 1, prepare the journal entry for the Casting Department for the materials charged to production. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2

A(2). On May 31, prepare the journal entry for the Casting Department for the conversion costs charged to production. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3

A(3). On May 31, prepare the journal entry for the Casting Department for the completed production transferred to the Machining Department. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2

Final Question:

B. Determine the Work in Process-Casting Department May 31 balance.

C. Compute and evaluate 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	Increase, Decrease	$
Change in conversion	Increase, Decrease	$

Answer 1

A) JOURNAL ENTRIES:
May 1:
Work in Process-Casting Department	350000
Materials-Alloy		35000
May 31:
Work in Process-Casting Department	49600
Wages payable		19840
Factory overhead-Casting Department		29760
May 31:
Work in Process-Machining Department	402684
Work in Process-Casting Department		402684
B)
Ending WIP	200	28000	1760	29760
C) Cost per equivalent unit:
for May		140	20
for April		132	18
Change		8	2
		Increase	Increase

Calculations:

Units to be accounted for:	Pounds
beginning WIP	230
introduced during the month	2500
Total units to be accounted for	2730
Units accounted for:		Equivalent units
		Materials	Conversion
beginning WIP completed	230	0	92
introduced and completed	2300	2300	2300
completed and transferred	2530	2300	2392
ending WIP	200	200	88
Total units accounted for	2730	2500	2480
Costs to be accounted for:		Materials	Conversion	Total
beginning WIP		30360	2484	32844
Costs added during the period		350000	49600	399600
Total costs to be accounted for		380360	52084	432444
Cost per equivalent unit:		140	20
Costs accounted for:
beginning WIP	230	30360	2484	32844
costs of completion		0	1840	1840
Cost of beginning WIP transferred out	230	30360	4324	34684
Introduced and transferred out	2300	322000	46000	368000
Cost of units transferred out	2530	352360	50324	402684
Ending WIP	200	28000	1760	29760
Costs accounted for	2730	380360	52084	432444