World Class Steaks is a meat processing firm based in Texas. It has two departments: preparation (prep) and shipping. For the prep department conversion costs are added evenly during the process and the first direct material, meat, is added at the beginning of the process. A second material, seasoning, is added at 90% point in the process. All completed units are transferred to the shipping department. In the shipping department, an additional material, packaging, is added to the product at the 20% point in the process. Completed units are transferred to finished goods. Additional information for both departments is presented below:

Preparation Department

Beginning Inventory contained 7,200 units (45% complete), meat - $10,632 and conversion $2,778.

Units started were 60,000; Units completed were 49,200. Ending Inventory is 70% complete with respect to conversion.

Within the Preparation Department, the following transactions occurred:

Meat purchased for $125,000 on account. Seasoning purchased for $15,000 for cash.

$111,000 of meat was put into process; seasoning used was $12,000.

Direct labor incurred was $50,000; Manufacturing Overhead incurred was $39,664.

Conversion is applied to production.

Completed product was transferred to the Shipping Department.

Shipping Department

Beginning Inventory contained 25,200 units (70% complete), transferred in $93,240,

packaging $10,000,

conversion $46,950

Ending Inventory contained 16,800 units (25% complete).

Within the Shipping Department, the following transactions occurred:

Packaging was purchased for $15,250.

$11,250 of packaging was used.

Direct labor incurred was $40,000; Manufacturing Overhead incurred was $41,690.

Conversion is applied to production.

Completed product was transferred to Finished Goods.

Finally,

35,000 packages were sold for $6 each.

Selling and Administrative expense is $40,000

REQUIRED:

Prepare a production cost worksheet assuming FIFO for the Preparation Department. (Round to FOUR decimal points, if necessary)

Prepare a production cost worksheet assuming weighted average for the Shipping Department. (Round to FOUR decimal points, if necessary)

Prepare an Income Statement for World Class Steaks.

Journalize all entries.