Question

SolarTech Company manufactures a special lacquer, which is used in the aeronautical and space industries. 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 CXX to the Finishing Department. There the product is completed, packaged, and shipped under the brand name Solarfast.


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 20x5 is $1.50 per direct-labor dollar.
The following information relates to production during November 20x5 in the Mixing Department.
a. Work in process, November 1 (5,000 pounds, 70 percent complete as to conversion):
Raw material......................................................................... $31,600
Direct labor............................................................................ 18,000
Departmental overhead........................................................... 10,220
Allocated plant overhead.........................................................27,000
b. Raw material:
Inventory, November 1, 3,000 pounds....................................16,000
Purchases, November 3, 9,000 pounds....................................44,000
Purchases, November 18, 12,000 pounds............................... 60,000
Released to production during November, 17,000 pounds
c. Direct-labor cost during November, $70,000
d. Direct departmental overhead costs, $35,000
e. Transferred to Finishing Department, 16,000 pounds
f. Work in process, November 30, 6,000 pounds, 30 percent complete as to conversion
The company uses weighted-average process costing to accumulate product costs. However, for raw-material inventories the firm uses the FIFO inventory method.

Required:
1. Prepare a production report for the Mixing Department for November 20x5. 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.
c. Cost of CXX transferred to the Finishing Department.
d. Cost of the work-in-process inventory on November 30, 20x5, 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 CXX out of the Mixing Department.
(CMA,adapted)


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  • CreatedApril 22, 2014
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