The Chatham Company makes a water-treatement chemical in a single processing dep
ID: 2483380 • Letter: T
Question
The Chatham Company makes a water-treatement chemical in a single processing department. Direct materials are added at the start of the process. Conversion costs are added evenly during the process, Chatham uses the weighted average-method of process costing. The following information for july 2005 is available. Ending work in process is 50% converted as to direct labor and overhead. Prepare a production report. Part I, II, and III. Calculate cost per unit for materials, labour and overhead. Prepare the journal entries for the costs used in work in process plus the cost transferred fro work-in-process to finished goods. What is the balance in manufacturing overhead at july 31, 2005 before the account is closed out? What is the journal entry to account for the over or under-applied overhead? What is the total and individual component july 31, 2005 balances in work-in-process?Explanation / Answer
Answer
Answer 1
Statement of Equivalent Production Units
Material
Conversion
Particulars
Output
%
Units
%
Units
Opening Work in process
10000
Units completed and Transferred during July
34000
100%
34000
100%
34000
Input
40000
50000
Ending work in process
16000
100%
16000
50%
8000
50000
50000
42000
Statement of cost per unit
Figures in $
Particulars
Total Cost
Equivalent units
Cost per Equivalent Units
Material
340000
50000
6.8
(60000+280000)
Labor
315000
42000
7.5
(50000+265000)
Overhead
126000
42000
3
(20000+106000)
Statement of Equivalent Production Units
Material
Conversion
Particulars
Output
%
Units
%
Units
Opening Work in process
10000
Units completed and Transferred during July
34000
100%
34000
100%
34000
Input
40000
50000
Ending work in process
16000
100%
16000
50%
8000
50000
50000
42000
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