GroFast Company manufactures a high-quality fertilizer, which is used primarily by commercial veg-etable growers. Two departments are involved in the production process. In the Mixing Department, various chemicals are entered into production. After processing, the Mixing Department transfers a chemical called Chemgro to the Finishing Department. There the product is completed, packaged, and shipped under the brand name Vegegro. Various chemicals --> Mixing Dept (Chemgro)-->Finishing Dept (Vegegro) ---> In the Mixing Department, the raw material is added at the beginning of the process. Labor and overhead are applied continuously throughout the process. All direct departmental overhead is traced to the departments, and plant overhead is allocated to the departments on the basis of direct-labor. The plant overhead rate for 20x2 is $.40 per direct-labor dollar. The following information relates to production during November 20x2 in the Mixing Department. a. Work in process, November 1 (4,000 pounds, 75 percent complete as to conversion): Raw material ..........................................................................................................$22,800 Direct labor at $5.00 per hour ...........................................................................24,650 Departmental overhead .......................................................................................12,000 Allocated plant overhead .......................................................................................9,860 b. Raw material: Inventory, November 1, 2,000 pounds ............................................................$10,000 Purchases, November 3, 10,000 pounds ...........................................................51,000 Purchases, November 18, 10,000 pounds .........................................................51,500 Released to production during November, 16,000 pounds c. Direct-labor cost, $103,350 d. Direct departmental overhead costs, $52,000 e. Transferred to Finishing Department, 15,000 pounds f. Work in process, November 30, 5,000 pounds, 20 percent complete The company uses weighted-average process costing to accumulate product costs. However, for raw-material inventories, the firm uses the FIFO (i.e., first in, first out) inventory method. Required: 1. Prepare a production report for the Mixing Department for November 20x2. The report should show: a. Equivalent units of production by cost factor (i.e., direct material and conversion). b. Cost per equivalent unit for each cost factor. (Round your answers to the nearest cent.) c. Cost of Chemgro transferred to the Finishing Department. d. Cost of the work-in-process inventory on November 30, 20x2, in the Mixing Department. 2. Prepare journal entries to record the following events: a. Release of direct material to production during November. b. Incurrence of direct-labor costs in November. c. Application of overhead costs for the Mixing Department (direct departmental and allocated plant overhead costs.) d. Transfer of Chemgro out of the Mixing Department
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
GroFast Company manufactures a high-quality fertilizer, which is used primarily by commercial veg-etable growers. Two departments are involved in the production process. In the Mixing Department, various chemicals are entered into production. After processing, the Mixing Department transfers a chemical called Chemgro to the Finishing Department. There the product is completed, packaged, and shipped under the brand name Vegegro.
Various chemicals --> Mixing Dept (Chemgro)-->Finishing Dept (Vegegro) --->
In the Mixing Department, the raw material is added at the beginning of the process. Labor and
The following information relates to production during November 20x2 in the Mixing Department.
a. Work in process, November 1 (4,000 pounds, 75 percent complete as to conversion):
Raw material ..........................................................................................................$22,800
Direct labor at $5.00 per hour ...........................................................................24,650
Departmental overhead .......................................................................................12,000
Allocated plant overhead .......................................................................................9,860
b. Raw material:
Inventory, November 1, 2,000 pounds ............................................................$10,000
Purchases, November 3, 10,000 pounds ...........................................................51,000
Purchases, November 18, 10,000 pounds .........................................................51,500
Released to production during November, 16,000 pounds
c. Direct-labor cost, $103,350
d. Direct departmental overhead costs, $52,000
e. Transferred to Finishing Department, 15,000 pounds
f. Work in process, November 30, 5,000 pounds, 20 percent complete
The company uses weighted-average
Required:
1. Prepare a production report for the Mixing Department for November 20x2. The report should show:
a. Equivalent units of production by cost factor (i.e., direct material and conversion).
b. Cost per equivalent unit for each cost factor. (Round your answers to the nearest cent.)
c. Cost of Chemgro transferred to the Finishing Department.
d. Cost of the work-in-process inventory on November 30, 20x2, in the Mixing Department.
2. Prepare
a. Release of direct material to production during November.
b. Incurrence of direct-labor costs in November.
c. Application of overhead costs for the Mixing Department (direct departmental and allocated plant overhead costs.)
d. Transfer of Chemgro out of the Mixing Department.
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