E 3. Gilbert, Inc., which uses a process costing system, makes a chemical used as a food preservative. The manufacturing process involves Departments A and B.

The company had the following total costs and unit costs for completed production last month, when it manufactured 10,000 pounds of the chemical. Neither Department A nor Department B had any beginning or ending work in process inventories.

Total Cost Unit Cost Department A Direct materials $10,000 $1.00 Direct labor 2,600 0.26 Overhead 1,300 0.13 Total costs $13,900 $1.39 Department B Direct materials $ 3,000 $0.30 Direct labor 700 0.07 Overhead 1,000 0.10 Total costs $ 4,700 $0.47 Totals $18,600 $1.86 1. How many Work in Process Inventory accounts would Gilbert use?

2. What dollar amount of the chemical’s production cost was transferred from Department A to Department B last month?

3. What dollar amount was transferred from Department B to the Finished Goods Inventory account?

4. What dollar amount is useful in determining a selling price for 1 pound of the chemical?

Equivalent Production: FIFO Costing Method