The Chatham Company makes a water-treatment chemical in a single processing depa
ID: 2483519 • Letter: T
Question
The Chatham Company makes a water-treatment chemical in a single processing department. Direct material are added at the start of the process. Conversion costs are added evenly during the process, Chatham uses the weighted average-method of process costing. The following information for July 2005 is available.
Work in process, July 1 10,000 units(70% converted)
Started during July 40,000 units
Completed and transferred during July 34,000 units
Ending work in process is 50% converted as to direct labor and overhead.
Beginning Raw Material $ 4,000
Costs for July
Raw materiala purchased in July $ 300,000
Actual Overhead Costs $ 100,000
work in process, beginning
Direct materials $ 60,000
Direct Labor $ 50,000
Overhead Applied $ 20,000
Direct Materials added during July $ 280,000
Direct Labor added during July $ 265,000
Overhead applied during July $ 106,000
1 Prepare a production Report. Part I part II and III. Calculate cost per unit for materials, labor and overhead.
2 Prepare the journal entries for the costs used in work in process plus the cost transferred from work-in-process to finished goods
3 What is the balance in manufacturing overhead at July 31, 2005 before the account is closed out?
4 What is the journal entry to account for the over or under-applied overhead?
5 What is the total and individual component July 31, 2005 balances in work-in-process?
Explanation / Answer
Cost of Prduction report Equivalent Units Flow Of Units Physical Units Direct Material Direct Labour Overhead Units to be accounted for Beginning work in process inventory 10000 Units started this period 40000 Total u nits to be accounted for 50000 Units accounnted for: Completed and transferred out (b) 34000 34000 34000 34000 Ending work in progress inventory© 16000 16000 8000 8000 Total units to be accounted for (f) 50000 50000 42000 42000 Flow of Cost Cost in the begnning work in progress inventory 130000 60000 50000 20000 Cost added in current period 50% IN dm AND 1:2 IN Direct labour and overead 651000 280000 265000 106000 Total Cost to be accounted for (e) 781000 340000 315000 126000 Cost per equivalent unit (a) (e/f) 17.30 6.80 7.50 3.00 Ans 1 Cost accounted for Cost assigned to units transferred out (a*b) 588200 231200.00 255000.00 102000.00 Ans 5 Cost in ending work in progress inventory (a*c) 192800 108800.00 60000.00 24000.00 Ans 5 Total Cost accounted for 781000.00 340000.00 315000.00 126000.00 Ans 5 Ans 2 Accounts title Dr Cr $ Work in process 651000 Direct material 280000 Wages Payable 265000 Manufacturing Overhead 106000 (Being additional cost incurred) Finished Goods 588200 Work in process 588200 (Being goods transferred to finished goods) Ans 3 $6000 (106000-100000) Ans 4 Overapplied Manufacturing Overhead $6000 Cost of Good Sold $6000