Chapter 6 Comprehensive Process Costing Problem - Well Products produces an antacid
product that goes through two departments
ACC 214 – Cost Accounting Excel Assignment Number 3
Well Products produces an antacid product that goes through two
departments – Cooking and Bottling. The company has recently hired a new assistant
accountant, who has prepared the following summary of production and costs for
the Cooking Department for May using the weighted-average method.
Cooking Department Costs:
Work in process inventory, May 1: 70,000 quarts, materials 60% complete,
labor and overhead 30% complete $ 61,000* Materials added during May 569,850 Labor
added during May 100,000 Overhead applied during May 235,160 Total
department costs 966,010
*Consists of materials, $39,000; labor $5,000; and overhead, $17,000
Cooking Department costs assigned to:
Quarts completed and transferred to the Bottling Department: 400,000 quarts at ? per
quart ? Work in process inventory, May 31: 50,000 quarts, Materials 70%
complete, labor and overhead 40% Complete ? Total departmental costs assigned ?
The new accountant has determined the cost per quart transferred to be
$2.415, as follows:
Total departmental
costs, 966,010
Quarts completed and transferred, 400,000
However, the new accountant is unsure how to use this unit cost figure
in assigning cost to the ending work in process inventory. In addition, the
company’s general ledger shows only $898,460 in costs transferred from the
Cooking Department to the Bottling Department, which does not agree with the
$966,000 figure above.
The general ledger also shows the following costs incurred in the
Bottling Department during May: materials used, $130,000, direct labor cost
incurred, $80,000; and overhead cost applied to products, $158,000.
Required:
1. Prepare journal entries as follows to record activity in the company
during May. Key your entries to the letters (a) through (g) below.
a. Raw materials were issued to the two departments for use in
production.
b. Direct labor costs were incurred in the two departments.
c. Manufacturing overhead costs were incurred, $400,000. (Credit
Accounts Payable) The company maintains a single manufacturing Overhead account
for the entire plant.
d. Manufacturing overhead cost was applied to production in each
department using predetermined overhead rates.
e. Units completed as to processing in the Cooking Department were
transferred to the Bottling Department, $898,460.
f. Units completed as to processing in the Bottling Department were
transferred to Finished Gods, $1,300,000.
g. Units were sold on account, $2,000,000. The Cost of Goods Sold was
$1,250,000.
2. Post the journal entries from (1) above to T-accounts. Balances in
selected accounts on May 1 are given below:
|
Raw materials
|
$710,000
|
||
|
Work in Process – Bottling Department
|
$85,000
|
||
|
Work in Process – Cooking Department
|
$61,000
|
||
|
Finished Goods
|
$45,000
|
||
After posting the entries to the T-accounts, find the ending balance in
the inventory accounts and the Manufacturing Overhead account. Use just one
Manufacturing Overhead account, using debit amounts for actual or incurred
overhead and credit amounts for assigning or applying overhead.
3. Prepare a production report for the Cooking Department for May using
the FIFO method.
4. Using the closeout to the COGS method, determine the over or
underapplied overhead and show the journal entry to close the manufacturing
overhead account.
Submission: This problem should be worked in an Excel spreadsheet. You
may organize the Excel spreadsheet any way you like, but you must organize it
so that it can be easily followed. Use the part numbers and letters to help
organize your answer. An assignment has been created in Blackboard under Module
6. This is the location where you can upload the document. Just open this
assignment and there will be a place to upload documents.
TUTORIAL
PREVIEW
1. Prepare journal entries as follows to record activity in the company
during May. Key your entries to the letters (a) through (g) below.
|
a.
|
Work in Process—Cooking
|
569,850
|
|
|
|
Work in Process—Bottling
|
130,000
|
|
|
|
Raw Materials
|
|
699,850
|
|
|
|
|
|
|
b.
|
Work in Process—Cooking
|
100,000
|
|
|
|
Work in Process—Bottling
|
80,000
|
|
