Chapter 20, Problem 20.2EX

Flowchart of accounts related to service and processing departments

Alcoa Inc. is the world's largest producer of aluminum products. One product that Alcoa manufactures is aluminum .sheet products for the aerospace industry. The entire output of the Smelting Department is transferred to the Rolling Department. Part of the fully processed goods from the Rolling Department are sold as rolled sheet, and the remainder of the goods are transferred to the Converting Department for further processing into sheared sheet.

Prepare a diagram using T accounts showing the flow of costs from the processing department accounts into the finished goods accounts and then into the cost of goods sold account. The relevant accounts are as follows:

Cost of Goods Sold

Materials

Factory Overhead—Smelting Department

Factory Overhead—Rolling Department

Factory Overhead—Converting Department

Finished Goods—Rolled sheet

Finished Goods—Sheared Sheet

Work in Process—Smelting Department

Work in Process—Rolling Department

Work in Process—Converting Department