Major League Bat Company manufactures baseball bats. In addition to its work in
ID: 2532061 • Letter: M
Question
Major League Bat Company manufactures baseball bats. In addition to its work in process inventories, the company maintains inventories of raw materials and finished goods. It uses raw materials as direct materials in production and as indirect materials. Its factory payroll costs include direct labor for production and indirect labor. All materials are added at the beginning of the process, and conversion costs are applied uniformly throughout the production process.
Required:
You are to maintain records and produce measures of inventories to reflect the July events of this company. The June 30 balances: Raw Materials Inventory, $25,000; Work in Process Inventory, $8,135 ($2,660 of direct materials and $5,475 of conversion); Finished Goods Inventory, $110,000; Sales, $0; Cost of Goods Sold, $0; Factory Payroll Payable, $0; and Factory Overhead, $0.
1. Prepare journal entries to record the following July transactions and events.
Purchased raw materials for $125,000 cash (the company uses a perpetual inventory system).
Used raw materials as follows: direct materials, $52,440; and indirect materials, $10,000.
Recorded factory payroll payable costs as follows: direct labor, $202,250; and indirect labor, $25,000.
Paid factory payroll cost of $227,250 with cash (ignore taxes).
Incurred additional factory overhead costs of $80,000 paid in cash.
Allocated factory overhead to production at 50% of direct labor costs.
2. Information about the July inventories follows. Use this information with that from part 1 to prepare a process cost summary, assuming the weighted-average method is used. (Round "Cost per EUP" to 2 decimal places.)
3. Using the results from part 2 and the available information, make computations and prepare journal entries to record the following:
Total costs transferred to finished goods for July.
Sale of finished goods costing $265,700 for $625,000 in cash.
4. Post entries from parts 1 and 3 to the following general ledger accounts.
5. Compute the amount of gross profit from the sales in July. (Add any underapplied overhead to, or deduct any overapplied overhead from, the cost of goods sold.)
Explanation / Answer
ans 1 Accounts Title Dr Cr a Raw material Inventory $125,000 Accounts Payable $125,000 b Work in process Inventory $52,440 Factory Overhead 10000 Raw material Inventory $62,440 c Work in process Inventory $202,250 Factory Overhead 25000 Wages payable $227,250 d Wages payable $227,250 cash $227,250 e Factory Overhead $80,000 cash $80,000 f Work in process Inventory 101125 Factory Overhead (50%*202250) $101,125 Cost of Prduction report (weighted avg method) ProductionDepartment Equivalent Units Flow Of Units Physical Units Direct material Conversion Cost Units to be accounted for Beginning work in process inventory 5000 Units started this period 14000 Total u nits to be accounted for 19000 Units accounnted for: Units transferred out (b) 11000 11000 11000 Ending work in progress inventory c (100% material and 40% conversion) 8000 8000 3200 Total units to be accounted for (f) 19000 19000 14200 Flow of Cost Cost in the begnning work in progress inventory 8135 2660 5475 cost added to process 355815 $52,440 $303,375 (202250+101125) Total Cost to be accounted for (e) 363950 55100 308850 Cost per equivalent unit (a) 2.90 21.75 Cost accounted for Cost assigned to units transferred out (a*b) 271150 31900 239250 Cost in ending work in progress inventory (a*c) 92800 23200 69600 Total Cost accounted for 363950 55100 308850 ans 3 Total cost transferred to finished goods 271150 Dr Cr Finished Goods Inventory 271150 Work in process Inventory 271150 Cash 625000 sales 625000 Cost of good sold 265700 Finished Goods Inventory 265700 ans 5 Sales 625000 Less: Cost of goods sold 265700 Underapplied (10000+25000+80000)-101125 13875 Gross profit 345425
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.