Cost of Production and Journal Entries Lighthouse Paper Company manufactures newsprint. The product is manufactured in two departments, Papermaking and Converting. Pulp is first placed into a vessel at the beginning of papermaking production. The following information concerns production in the Papermaking Department for March. Account Work in Process—Papermaking Department Account No. Date Item Debit Credit Balance Debit Credit Mar. 1 Bal., 9,000 units, 30% completed 17,640 31 Direct materials, 48,000 units 67,200 84,840 31 Direct labor 20,070 104,910 31 Factory overhead 11,286 116,196 31 Goods transferred, 53,600 units ? ? 31 Bal., 3,400 units, 40% completed ? a1. Prepare the March journal entry for the Papermaking Department for the materials charged to production. fill in the blank a3b455f85057041_2 fill in the blank a3b455f85057041_4 a2. Prepare the March journal entry for the Papermaking Department for the conversion costs charged to production. If an amount box does not require an entry, leave it blank. fill in the blank 33bfaffdcf9f00d_2 fill in the blank 33bfaffdcf9f00d_3 fill in the blank 33bfaffdcf9f00d_5 fill in the blank 33bfaffdcf9f00d_6 fill in the blank 33bfaffdcf9f00d_8 fill in the blank 33bfaffdcf9f00d_9 a3. Prepare the March journal entry for the Papermaking Department for the completed production transferred to the Converting Department. If required, round your interim calculations to two decimal places and your final answer to the nearest dollar. fill in the blank 0bae7effbfd3fdd_2 fill in the blank 0bae7effbfd3fdd_4 b. Determine the Work in Process—Papermaking Department March 31 balance. If required, round your interim calculations to two decimal places and your final answer to the nearest dollar.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Cost of Production and Journal Entries
Lighthouse Paper Company manufactures newsprint. The product is manufactured in two departments, Papermaking and Converting. Pulp is first placed into a vessel at the beginning of papermaking production. The following information concerns production in the Papermaking Department for March.
| Account Work in Process—Papermaking Department | Account No. | ||||||||
| Date | Item | Debit | Credit | Balance | |||||
| Debit | Credit | ||||||||
| Mar. | 1 | Bal., 9,000 units, 30% completed | 17,640 | ||||||
| 31 | Direct materials, 48,000 units | 67,200 | 84,840 | ||||||
| 31 | Direct labor | 20,070 | 104,910 | ||||||
| 31 | Factory |
11,286 | 116,196 | ||||||
| 31 | Goods transferred, 53,600 units | ? | ? | ||||||
| 31 | Bal., 3,400 units, 40% completed | ? |
a1. Prepare the March
| fill in the blank a3b455f85057041_2 | |||
| fill in the blank a3b455f85057041_4 |
a2. Prepare the March journal entry for the Papermaking Department for the conversion costs charged to production. If an amount box does not require an entry, leave it blank.
| fill in the blank 33bfaffdcf9f00d_2 | fill in the blank 33bfaffdcf9f00d_3 | ||
| fill in the blank 33bfaffdcf9f00d_5 | fill in the blank 33bfaffdcf9f00d_6 | ||
| fill in the blank 33bfaffdcf9f00d_8 | fill in the blank 33bfaffdcf9f00d_9 |
a3. Prepare the March journal entry for the Papermaking Department for the completed production transferred to the Converting Department. If required, round your interim calculations to two decimal places and your final answer to the nearest dollar.
| fill in the blank 0bae7effbfd3fdd_2 | |||
| fill in the blank 0bae7effbfd3fdd_4 |
b. Determine the Work in Process—Papermaking Department March 31 balance. If required, round your interim calculations to two decimal places and your final answer to the nearest dollar.
$fill in the blank c6345ffb306205f_1
| Whole Units | Equivalent Units | ||
| Materials | Conversion | ||
| Inventory in process, Mar. 1 (30% completed) |
9,000 | 6,300 | |
| Started and completed in Mar. | 44,600 | 44,600 | 44,600 |
| Transferred to Converting Department in Mar. |
53,600 | 44,600 | 50,900 |
| Inventory in process, Mar. 31 (40% completed) |
3,400 | 3,400 | 1,360 |
| Total | 57,000 | 48,000 | 52,260 |
Cost per Equivalent Unit of Materials = $67,200 / 48,000 = $1.40
Cosr per Equivalent Unit of Conversion = $31,356 / 52,260 = $0.60
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