A firmproduces its products by a continuous process involving threeproduction de
ID: 2433800 • Letter: A
Question
A firmproduces its products by a continuous process involving threeproduction departments, 1 through 3. Present entries torecord the following selected transactions related to productionduring August:
(a)
Materials purchased on account,$130,000.
(b)
Material requisitioned for use inDepartment 1, $125,700, of which $124,200 entered directly into theproduct.
(c)
Labor cost incurred in Department1, $195,400, of which $174,000 was used directly in the manufactureof the product.
(d)
Factory overhead costs forDepartment 1 incurred on account, $52,700.
(e)
Depreciation on machinery inDepartment 1, $29,200.
(f)
Expiration of prepaid insurancechargeable to Department 1, $7,000.
(g)
Factory overhead applied toproduction, $105,300.
(h)
Output of Department 1 transferredto Department 2, $362,700.
(a)
Materials purchased on account,$130,000.
(b)
Material requisitioned for use inDepartment 1, $125,700, of which $124,200 entered directly into theproduct.
(c)
Labor cost incurred in Department1, $195,400, of which $174,000 was used directly in the manufactureof the product.
(d)
Factory overhead costs forDepartment 1 incurred on account, $52,700.
(e)
Depreciation on machinery inDepartment 1, $29,200.
(f)
Expiration of prepaid insurancechargeable to Department 1, $7,000.
(g)
Factory overhead applied toproduction, $105,300.
(h)
Output of Department 1 transferredto Department 2, $362,700.
Explanation / Answer
(a) Materials purchased on account,$130,000Raw MaterialsInventory $130,000 AccountsPayable $130,000 _________________________________________________________________________ (b) Material requisitioned for use inDepartment 1, $125,700, of which $124,200 entered directly into theproduct. Work In Process - Department1 $125,700 Raw MaterialsInventory $124,200 ManufacturingOverhead $ 1,500 __________________________________________________________________________ (c) Labor cost incurred in Department 1,$195,400, of which $174,000 was used directly in the manufacture of theproduct Work InProcess - Department1 $195,400 RawMaterialsInventory $174,000 ManufacturingOverhead $ 21,400 __________________________________________________________________________ (d) Factory overhead costs for Department 1incurred on account, $52,700 Work InProcess - Department1 $52,700 ManufacturingOverhead $52,700 __________________________________________________________________________ (e) Depreciation on machinery in Department1, $29,200 Work InProcess - Department1 $29,200 ManufacturingOverhead $29,200 __________________________________________________________________________ (f) Expiration of prepaid insurancechargeable to Department 1, $7,000 Work InProcess - Department1 $7,000 ManufacturingOverhead $7,000 __________________________________________________________________________ (g) Factory overhead applied to production,$105,300 Work InProcess - Department1 $105,300 ManufacturingOverhead $105,300 __________________________________________________________________________ (h) Output of Department 1 transferred toDepartment 2, $362,700 Work InProcess - Department2 $362,700 WorkIn Process - Department1 $362,700 __________________________________________________________________________ ManufacturingOverhead $ 21,400 __________________________________________________________________________ (d) Factory overhead costs for Department 1incurred on account, $52,700 Work InProcess - Department1 $52,700 ManufacturingOverhead $52,700 __________________________________________________________________________ (e) Depreciation on machinery in Department1, $29,200 Work InProcess - Department1 $29,200 ManufacturingOverhead $29,200 __________________________________________________________________________ (f) Expiration of prepaid insurancechargeable to Department 1, $7,000 Work InProcess - Department1 $7,000 ManufacturingOverhead $7,000 __________________________________________________________________________ (g) Factory overhead applied to production,$105,300 Work InProcess - Department1 $105,300 ManufacturingOverhead $105,300 __________________________________________________________________________ (h) Output of Department 1 transferred toDepartment 2, $362,700 Work InProcess - Department2 $362,700 WorkIn Process - Department1 $362,700 __________________________________________________________________________ ManufacturingOverhead $52,700 __________________________________________________________________________ (e) Depreciation on machinery in Department1, $29,200 Work InProcess - Department1 $29,200 ManufacturingOverhead $29,200 __________________________________________________________________________ (f) Expiration of prepaid insurancechargeable to Department 1, $7,000 Work InProcess - Department1 $7,000 ManufacturingOverhead $7,000 __________________________________________________________________________ (g) Factory overhead applied to production,$105,300 Work InProcess - Department1 $105,300 ManufacturingOverhead $105,300 __________________________________________________________________________ (h) Output of Department 1 transferred toDepartment 2, $362,700 Work InProcess - Department2 $362,700 WorkIn Process - Department1 $362,700 __________________________________________________________________________ ManufacturingOverhead $29,200 __________________________________________________________________________ (f) Expiration of prepaid insurancechargeable to Department 1, $7,000 Work InProcess - Department1 $7,000 ManufacturingOverhead $7,000 __________________________________________________________________________ (g) Factory overhead applied to production,$105,300 Work InProcess - Department1 $105,300 ManufacturingOverhead $105,300 __________________________________________________________________________ (h) Output of Department 1 transferred toDepartment 2, $362,700 Work InProcess - Department2 $362,700 WorkIn Process - Department1 $362,700 __________________________________________________________________________ ManufacturingOverhead $7,000 __________________________________________________________________________ (g) Factory overhead applied to production,$105,300 Work InProcess - Department1 $105,300 ManufacturingOverhead $105,300 __________________________________________________________________________ (h) Output of Department 1 transferred toDepartment 2, $362,700 Work InProcess - Department2 $362,700 WorkIn Process - Department1 $362,700 __________________________________________________________________________ ManufacturingOverhead $105,300 __________________________________________________________________________ (h) Output of Department 1 transferred toDepartment 2, $362,700 Work InProcess - Department2 $362,700 WorkIn Process - Department1 $362,700 __________________________________________________________________________ WorkIn Process - Department1 $362,700 __________________________________________________________________________
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