E5-8. C ost of production report; addit ion of material. Marks Inc. produces a c

Question

E5-8. C ost of production report; addit ion of material. Marks Inc. produces a cologne, Mi Esencia, which s. In the third department, materials are added, doubling the requires processing in three department mber of units. The following data pertain to the operations of Depatment 3 for March 20,000 32,000 Units received from Department 2 Units transferred to finished goods storeroo The balance of the units are still in process-100% complete As to materials, 50% complete as to labor and overhead Cost transferred from Department 2... Cost added by the department $30,000 $ 8,800 Labor.. Factory Overhead.... 9,000 10,800 28,600 here was no beginning work in process inventory Required: Prepare the following (1) A cost of production report for Department 3 for March (2) The journal entry transferring cost out of Department 3

Explanation / Answer

UNITS TO ACCOUNT FOR: Beginning Work in Process units 0 Add: Units Started in Process (20000*2) 40,000 Total Units to account for: 40,000 UNITS TO BE ACCOUNTED FOR: Units started and completed 32,000 Ending Work in Process 8,000 Total Units to be accounted for: 40,000 Equivalent Units: Units Material Cost Conversion % Completion Units % Completion Units Units started and completed 32000 100% 32,000 100% 32,000 Ending Work in Process 8000 100% 8,000 50% 4,000 Total Equivalent units 40,000 36,000 TOTAL COST TO ACCOUNT FOR: Material Conversion Beginning work in Process 0 0 Cost Added during May 38,800 19,800 Total Cost to account for: 38,800 19,800 Equivalent Units 40,000 36,000 Cost per Equivalent unit 0.97 0.55 TOTAL COST ACCOUNTED FOR: Units started and Transferred out (32000 units) Equivalent unit Cost per EU Total Cost Material 32,000 0.97 31040 Conversion Cost 32,000 0.55 17600 Total Cost of Units completed and transferred out: 48640 Ending Work in process (8,000 units) Equivalent unit Cost per EU Total Cost Material 8,000 0.97 7760 Conversison Cost 4,000 0.55 2200 Total cost of Ending Work in process: 9,960 Journal Entry: Finished Goods inventory Account Dr. 48640       Work in process inventory Account 48640

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