Hall's Exteriors produces exterior siding for homes. The Preparation Department begins with wood, which is chopped into small bits. At the end of the process, an adhesive is added. Then the wood/adhesive mixture goes on to the Compression Department, where the wood is compressed into sheets. Conversion costs are added evenly throughout the preparation process. January data for the Preparation Department are as follows (in millions):

Requirements 

1. Draw a time line for the Preparation Department.

2. Use the time line to help you compute the equivalent units for direct materials and for conversion costs. Each direct material added at a different point in the production process requires its own equivalent-unit computation.

3. Compute the total costs of the units (sheets)

a. Completed and transferred out to the Compression Department

b. In the Preparation Department's ending work in process inventory

4. Prepare the journal entry to record the cost of the sheets completed and transferred out to the Compression Department.

5. Post the journal entries to the Work in Process Inventory Preparation T-account. What is the ending balance? 

Transcribed Image Text:

Sheets Beginning work in process inventory Started production Completed and transferred out to Compression in January Ending work in process inventory (40% of the way through the preparation process) Costs 0 sheets Beginning work in process inventory 3,000 sheets Costs added during January: Wood 2,700 1,950 sheets Adhesives 1,365 Direct labor 629 Manufacturing overhead 2,452 1,050 sheets Total costs 7,146