Cost of Production and Journal Entries AccuBlade Castings Inc. casts blades for
ID: 2538106 • Letter: C
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:
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.
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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.
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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.
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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).
Direct materials (1,200 x $140) $168,000 Conversion (1,200 x 40% x $11) 5,280 $173,280Explanation / Answer
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
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