Shamrock Industries uses process costing. All of the company\'s manufacturing ac
ID: 389399 • Letter: S
Question
Shamrock Industries uses process costing. All of the company's manufacturing activities take place in a single processing department. The following information was available for the month of June.
Direct materials
$
84,000
Direct labor
25,000
Manufacturing overhead applied
41,000
Total costs to account for in June
$
150,000
The amounts of work in process at the beginning and end of the month were immaterial and assigned no dollar value. During June, 13,250 units were completed, of which 10,000 were sold on account at $25 per unit.
a. Prepare a journal entry to summarize the total manufacturing costs applied to production in June.
b. Prepare the journal entry to transfer completed units from work in process to the finished goods warehouse in June.
c. Prepare the journal entries to record the sale of 10,000 units manufactured during the period and the related cost of goods sold.
Direct materials
$
84,000
Direct labor
25,000
Manufacturing overhead applied
41,000
Total costs to account for in June
$
150,000
Explanation / Answer
Transaction Account Titles and Explaination Debit Credit (a) Work-in-process inventory $ 1,50,000 Direct material $ 84,000 Direct labor $ 25,000 Manufacturing overheads $ 41,000 (Being total manufacturing cost to production recorded) (b) Finished goods inventory $ 1,50,000 Work-in-process inventory $ 1,50,000 (Being total manufacturing cost charged to Finished goods) (c) Cost of goods sold $ 1,10,000 Finished goods inventory $ 1,10,000 (Being cost of goods sold of 10,000 units recorded) Sales $ 2,50,000 Accounts receivables $ 2,50,000 (Being sales of 10,000 units recorded) Computation of cost of goods sold: (i) Total Manufacturing cost = $ 1,50,000 (ii) Total units produced = 13,250 (i) / (ii) Cost per unit = $ 11 Cost of goods sold of 10,000 units = 10,000 units X $11 = $ 1,10,000 Computation of sales amount: 10,000 units sold @ $25 = $ 2,50,000
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