Bay Manufacturing produces paint. The company has two processes: mixing and pack

Question

Bay Manufacturing produces paint. The company has two processes: mixing and packaging. The ingredients for the paint are mixed in large batches and then transferred to the packaging department, where one-gallon cans are filled, capped, labeled, and boxed. There was no work in process on February 1. The materials are all brought to the packaging job up front and charged to the job. Nothing is transferred to finished goods until the entire job is complete. The materials costs include the packaging, material, and the cost transferred from the mixing department. On February 2, 15,000 gallons (job 2-1) were transferred into the packaging department from the mixing department and completed on February 19. The costs incurred to complete job 2-1 in the packaging department are as follows:    Materials                        56,250    Labor                        11,250    Overhead (applied based on direct labor hours)                          7,500 On February 20, another 20,000 gallons (job 2-2) were transferred into the packaging department. Job 2-2 was 50% complete as to labor at the end of the month. The costs incurred (unit cost unchanged from job 2-1) to complete job 2-2 in the packaging department are as follows:    Materials                        75,000    Labor                        15,000    Overhead (applied based on direct labor hours)                        10,000 INSTRUCTIONS: 1. Compute the physical units of production. 2. Compute the cost per unit to complete packaging for labor, materials, overhead, and total. 3. Compute equivalent units and cost of work in process as of the end of February. 4. Record journal entries for:      a. the movement of materials from materials inventory to each job      b. the allocation of payroll to each job      c. the application of overhead to each job      d. the movement of work in process to finished goods Bay Manufacturing produces paint. The company has two processes: mixing and packaging. The ingredients for the paint are mixed in large batches and then transferred to the packaging department, where one-gallon cans are filled, capped, labeled, and boxed. There was no work in process on February 1. The materials are all brought to the packaging job up front and charged to the job. Nothing is transferred to finished goods until the entire job is complete. The materials costs include the packaging, material, and the cost transferred from the mixing department. On February 2, 15,000 gallons (job 2-1) were transferred into the packaging department from the mixing department and completed on February 19. The costs incurred to complete job 2-1 in the packaging department are as follows:    Materials                        56,250    Labor                        11,250    Overhead (applied based on direct labor hours)                          7,500 On February 20, another 20,000 gallons (job 2-2) were transferred into the packaging department. Job 2-2 was 50% complete as to labor at the end of the month. The costs incurred (unit cost unchanged from job 2-1) to complete job 2-2 in the packaging department are as follows:    Materials                        75,000    Labor                        15,000    Overhead (applied based on direct labor hours)                        10,000 INSTRUCTIONS: 1. Compute the physical units of production. 2. Compute the cost per unit to complete packaging for labor, materials, overhead, and total. 3. Compute equivalent units and cost of work in process as of the end of February. 4. Record journal entries for:      a. the movement of materials from materials inventory to each job      b. the allocation of payroll to each job      c. the application of overhead to each job      d. the movement of work in process to finished goods

Explanation / Answer

1) Total units produced = 15000/1000 = 15units

2) Cost per unit

3) Cost of Capital WIP : Since 50% as to the labour cost is complete for 20,000 gallons, the equivalent units comes to 50% of 20000/1000 = 10 units

      100,000

3)a) Goods in procress inventory XXX

To raw material inventory XXX

b) Goods in Process Inventory XXX

To Factory Payroll XXX

c) Goods in process XXX

To factory Overhead XXX

d) Finished Goods XXX

To Goods in process XXX

Material 56,250 3.75 Labour          11,250 0.75 Overhead 7,500 0.50          75,000 5.00

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