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 1,100 pounds of alloy in process, which were 30% complete as to conversion. The Work in Process balance for these 1,100 pounds was $159,280, determined as follows:

Direct materials (1,100 x $140)	$154,000
Conversion (1,100 x 30% x $16)	5,280
	$159,280

During May, the Casting Department was charged $1,400,800 for 10,300 pounds of alloy and $62,850 for direct labor. Factory overhead is applied to the department at a rate of 150% of direct labor. The department transferred out 10,700 pounds of finished castings to the Machining Department. The May 31 inventory in process was 15% complete as to conversion.

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

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.

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

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		$
Change in conversion

Answer 1

a-1)	Account titles & Explanations					Debit	Credit
	Work in process inventory					1,400,800
	materials -Alloy						1,400,800
a-2)	Account titles & Explanations					Debit	Credit
	Work in process -Casting Department					157,125
	Wages payable						62,850
	Factory overhead -Casting department						94275
a-3)	Account titles & Explanations					Debit	Credit
	Work in process -Machining Department					1,620,157
	Work in process -Casting Department						1,620,157
b)	work in process -casting department					97,048
c)
	Change in materials			Decrease	3.61
	Change in conversion			Decrease	0.97

Working notes:
			units	%	EUP-materials	%	EUP-CC
Equivalent units
completed & transferred			10,700	100%	10,700	100%	10,700
ending work in process			700	100%	700	15%	105
Equivalent units			11400		11,400		10,805
unit cost				Materials	CC	total
Beginning wip				154,000	5,280	159,280
cost added during year				1,400,800	157,125	1,557,925
total cost				1,554,800	162,405	1,717,205
Equivalent units				11,400	10,805
unit cost				136.39	15.03	151.42
Transferred
materials	10,700	*	136.386	=	1459330
conversion	10,700	*	15.03054	=	160826.8
total transferred					1620157
Ending work in process
materials	700	*	136.39	=	95470.18
conversion	105	*	15.03	=	1578.207
total transferred					97048