Data from March GALLONS Beginning Work-in-Process Inventory 400 gallons Started in production 9,100 gallons Completed and transferred out to Packaging in March 7,500 gallons Ending Work-in-Process Inventory (80% of the way 2,000 gallons through the fermenting process) COSTS Beginning Work-in-Process Inventory: Direct materials 5 1,575 Direct labor 180 Manufacturing overhead allocated 240 Costs added during March: Direct materials 10,300 Direct labor 1,400 Manufacturing overhead allocated 4,550 Total costs added during March % 16,250 Production Cost Report Wilson Winery Production Cost Report - Fermenting Department (Partial) Month Ended March 31 COSTS Costs to account for: Beginning work-in-process Costs added during the period Total costs to account for Divided by: Total equivalent units of production Cost per equivalent unit Costs accounted for: Completed and transferred out Ending work-in-process Total costs accounted for Direct Materials 1,675 10,300 11,875 % 9,500 125 9375 % 2,500 11,875 % Conversion Costs 420 $ 5,950 6,370 % 9,100 0.70 5250 5% 1,120 6,370 % Total Costs 1,985 16,250 18,245 14,625 3,620 18,245 Wilsan Winery in Pleasant Valley, Mew York, has two departments: Fermenting and Packaging. Direct materials are added at the beginning of the fermenting process (grapes) and at the end of the packaging process (bottles). Data from the month of March for the Fermenting Department are as follows: Wiew the data from March. Wilsan Winery completed the following production cost report for its Fermenting Department for the month of March: View the production cost report. Conversion costs are added evenly throughout each process. The company uses the weighted-average method. Eead the reguirements) Requirement 1. Prepare the journal enfries to record the assignment of direct materials and direct labor and the allocation of manufacturing overhead to the Fermenting Department. Assume labor costs are accrued and not yet paid. Also prepare the journal entry to record the cost of the gallons completed and transferred out to the Packaging Department. (Record debits first, then credits. Exclude explanations from any journal entries.) Begin with the journal entry to record the assignment of direct materials to the Fermenting Department. Do not record the assignment of direct labor or the allocation of manufacturing overhead with this entry. We will prepare those entries separately in the following steps. Date Accounts Debit Credit I N . _Jc____Jjr__ ] I A - Jj=j Prepare the journal entry to record the assignment of direct labor to the Fermenting Department. Assume labor costs are accrued and not yet paid. Date Accounts Credit Mar. 31 Prepare the journal entry for the allocation of manufacturing overhead to the Fermenting Department. Date Accounts Debit Credit Mar. 31 Also prepare the journal entry to record the cost of the gallons completed and transferred out to the Packaging Department. Date Accounts Debit Credit Mar. 31Requirement 2. Post the journal entries to the Work-in-Process InventoryFermenting T-account. What is the ending balance? Post the entries using the appropriate descriptions as posting references. Denote the ending balance as "Bal" Work-in-Process InventoryFermenting Requirement 3. What is the average cost per gallon transferred out of the Fermenting Department into the Packaging Department? Why would Wilson Winery's managers want to know this cost? (Round your answer to the nearest cent.) The average cost per gallon transferred out of Fermenting is |:| per gallon. Why would Wilson Winery's managers want to know this cost? () A. Managers would compare the average cost per gallon against their budgeted costs to determine whether the costs of the blending process remain under control. If budgeted costs are higher than the actual average cost per gallon, then the managers have done a good job controlling costs. In contrast, if the budgeted costs are lower than the actual average cost per gallon, managers will investigate the reason for the higher-than-expected costs in an effort to regain control over costs. (C) B. Managers use the cost per gallon for external financial reportingspecifically to calculate the Cost of Goods Sold on the Income Statement. i(_) . Managers use the cost per gallon for external financial reportingspecifically to calculate the ending inventory balances an the Balance Sheet. () D. All of the above are reasons why management would be interested in this cost per unit for gallons completed and transferred out to Finished Goods Inventory