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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 230 pounds of alloy in process, which were 60% complete as to conversion. The Work in Process balance for these 230 pounds was $32,844, determined as follows: Direct materials (230 × $132) $30,360 Conversion (230 × 60% × $18) 2,484 $32,844 During May, the Casting Department was charged $350,000 for 2,500 pounds of alloy and $19,840 for direct labor. Factory overhead is applied to the department at a rate of 150% of direct labor. The department transferred out 2,530 pounds of finished castings to the Machining Department. The May 31 inventory in process was 44% complete as to conversion. a. Prepare the following May journal entries for the Casting Department: 1. The materials charged to production 2. The conversion costs charged to production 3. The completed production transferred to the Machining Department b. Determine the Work in Process—Casting Department May 31 balance. d. Compute and evaluate the change in the costs per equivalent unit for direct materials and conversion from the previous month (April).

BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 20, Problem 20.18EX
Textbook Problem

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 230 pounds of alloy in process, which were 60% complete as to conversion. The Work in Process balance for these 230 pounds was $32,844, determined as follows:

Direct materials (230 × $132) $30,360
Conversion (230 × 60% × $18) 2,484
  $32,844

During May, the Casting Department was charged $350,000 for 2,500 pounds of alloy and $19,840 for direct labor. Factory overhead is applied to the department at a rate of 150% of direct labor. The department transferred out 2,530 pounds of finished castings to the Machining Department. The May 31 inventory in process was 44% complete as to conversion.

a. Prepare the following May journal entries for the Casting Department:

  1. 1. The materials charged to production
  2. 2. The conversion costs charged to production
  3. 3. The completed production transferred to the Machining Department

b. Determine the Work in Process—Casting Department May 31 balance.

d. Compute and evaluate the change in the costs per equivalent unit for direct materials and conversion from the previous month (April).

Expert Solution

(a-1)

To determine

Equivalents units for production

The activity of a processing department in terms of fully completed units is known as equivalent units. It includes the completed units of direct materials and conversion cost of beginning work in process, units completed and transferred out, and ending work in process.

Cost per unit

Total unit cost is the cost incurred by the company to produce one unit of product. The unit cost is calculated by dividing the units produced with the total cost.

(a-1)

To Prepare: The journal entry to record materials charged to production for casting department of Incorporation AC.

Explanation of Solution

Prepare the journal entry to record material charged to production for casting department of Incorporation AC as shown below:

Account title and Explanation Debit Credit
work in process - Casting Department $350,000
 Materials - Alloy ...
Expert Solution

(a-2)

To determine

To Prepare: The journal entry to record conversion costs charged to production for casting department of Incorporation AC.

Expert Solution

(a-3)

To determine

To Prepare: The journal entry to record transferred out to Machining department of Incorporation AC.

Expert Solution

 (b)

To determine
The ending work in process balance for casting department of Incorporation AC.

Expert Solution

(c)

To determine

To Evaluate: The changes in equivalent cost per unit of direct materials and conversion costs comparing with previous month.

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Chapter 20 Solutions

Accounting
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