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Chewy Gum Corporation produces bubble gum in large batches and uses a process costing system. Three departments – Mixing, Rolling and Packaging – are involved in the production process. Chewy Gum has the following transactions: a. Direct materials totalling $20,000 - $6000 for the mixing department, $5000 for the rolling department, and $9000 for the packaging department - are requisitioned and placed in production. b. Each production department incurs the following labor costs (wages payable) and manufacturing overheads: Direct labor costs | $2500 $4600 Packaging | $2200 | Manufacturing overhead S10,000 $7,000 $7,500 Mixing Rolling c. Products with a cost of $5500 are transferred from the mixing department to the rolling department. d. Products with a cost of $6400 are transferred from the rolling

Chewy Gum Corporation produces bubble gum in large batches and uses a process costing system. Three departments – Mixing, Rolling and Packaging – are involved in the production process. Chewy Gum has the following transactions: a. Direct materials totalling $20,000 - $6000 for the mixing department, $5000 for the rolling department, and $9000 for the packaging department - are requisitioned and placed in production. b. Each production department incurs the following labor costs (wages payable) and manufacturing overheads: Direct labor costs | $2500 $4600 Packaging | $2200 | Manufacturing overhead S10,000 $7,000 $7,500 Mixing Rolling c. Products with a cost of $5500 are transferred from the mixing department to the rolling department. d. Products with a cost of $6400 are transferred from the rolling

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Chewy Gum Corporation produces bubble gum in large batches and uses a process costing system. Three departments- Mixing, Rolling and Packaging - are involved in the production process. Chewy Gum has the following transactions: a. Direct materials totalling $20,000 - S6000 for the mixing department, $5000 for the rolling department, and $9000 for the packaging department – are requisitioned and placed in production. b. Each production department incurs the following labor costs (wages payable) and manufacturing overheads: Mixing Rolling Direct labor costs $2500 $4600 Packaging | $2200 Manufacturing overhead S10,000 $7,000 $7,500 c. Products with a cost of $5500 are transferred from the mixing department to the rolling department. d. Products with a cost of $6400 are transferred from the rolling department to the packaging department. e. Products with a cost of $8300 are sold to customers. Prepare the following steps for each transaction: 1. Prepare a journal entry to record the transactions. 2. Summarise the cost through T-accounts.
Transcribed Image Text:Chewy Gum Corporation produces bubble gum in large batches and uses a process costing system. Three departments- Mixing, Rolling and Packaging - are involved in the production process. Chewy Gum has the following transactions: a. Direct materials totalling $20,000 - S6000 for the mixing department, $5000 for the rolling department, and $9000 for the packaging department – are requisitioned and placed in production. b. Each production department incurs the following labor costs (wages payable) and manufacturing overheads: Mixing Rolling Direct labor costs $2500 $4600 Packaging | $2200 Manufacturing overhead S10,000 $7,000 $7,500 c. Products with a cost of $5500 are transferred from the mixing department to the rolling department. d. Products with a cost of $6400 are transferred from the rolling department to the packaging department. e. Products with a cost of $8300 are sold to customers. Prepare the following steps for each transaction: 1. Prepare a journal entry to record the transactions. 2. Summarise the cost through T-accounts.
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