Chapter 5: Process Costing Megan's Classic Cream Soda makes delicious old-fashioned cream soda which is sells to restaurants and soda shops across the nation. The company has two processing departments to make it product -Formulating and Bottling. In the Formulating Department, ingredients are checked for quality and then mixed and injected with carbon dioxide to create bulk cream soda. In the Bottling Department, bottles are checked for defects, filled with cream soda, capped, visually inspected again for defects, and then packed for shipping. July 1 inventories are as follows: Raw Materials $5,100 Work in Process -Formulating Department $0 Work in Process -Bottling Department $4,110 Finished Goods -$3,200 During July, the following transactions occurred. Jul 1 Purchased $53,400 of raw materials on account. Incurred $61,200 for factory labor. (Credit Factory Wages Payable) Incurred $75,000 of manufacturing overhead; $45,50o was paid and the remainder was unpaid. Requisitioned materials for Formulating $33,000 and Bottling $19,600. Payroll registers shows factory labor for Formulating to be $24,000 and for Bottling to be $37,200. Applied overhead at the rate of $20 per machine hour. Machine hours were Formulating 1,800 and Bottling 1,720. Transferred goods costing $81,000 from the Formulating Department to the Bottling Department. Transferred goods costing $155,610 from Bottling Department to Finished Goods. 2 3 7 Sold goods costing $158,810 for $208,390 on account. Transfer any under or over applied manufacturing overhead to the appropriate 9. 10 account. Requirement 1: Journal Entries Journalize the transactions and post to manufacturing accounts. Requirement 2: Production Cost Report Use the below information to prepare the production cost report for the Formulating Department for the month of July. Production: 90,000 units finished and transferred out; 30,000 units are in ending work in process that are 10o% complete as to materials and 20% complete as to conversion costs. 45 6.