Herbal Drinks Company uses a process costing system to track costs associated with producing its mint-flavored iced tea. The iced tea is first processed in a Brewing Department at Herbal and is then transferred out and completed in the Packaging Department. The finished cases of iced tea are then moved to the Finished Goods Inventory. The following information relates to Herbal's two departments for the month of February: • • • Cases of iced tea in WIP, February 1: Brewing = 12,000; Packaging = 4,500 = Cases of iced tea completed/transferred out during February: Brewing 84,000; Packaging = ? = Cases of iced tea in WIP, February 28: Brewing = 5,500; Packaging 9,500 = How many cases of iced tea were completed and transferred to Finished Goods Inventory during February?

Herbal Drinks Company uses a process costing system to track costs associated with producing its mint-flavored iced tea. The iced tea is first processed in a Brewing Department at Herbal and is then transferred out and completed in the Packaging Department. The finished cases of iced tea are then moved to the Finished Goods Inventory. The following information relates to Herbal's two departments for the month of February: • • • Cases of iced tea in WIP, February 1: Brewing = 12,000; Packaging = 4,500 = Cases of iced tea completed/transferred out during February: Brewing 84,000; Packaging = ? = Cases of iced tea in WIP, February 28: Brewing = 5,500; Packaging 9,500 = How many cases of iced tea were completed and transferred to Finished Goods Inventory during February?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter3: Process Cost Systems

Section: Chapter Questions

Problem 4PA: Work in process account data for two months; cost of production reports Hearty Soup Co. uses a...

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XYZ Corporation uses a process costing system to collect costs related to the production of its ice-cream flavored cola. The cola is first processed in a Mixing Department at Health and is then transferred out and finished up in the Bottling Department. The finished cases of cola are then transferred to Finished Goods Inventory. The following information relates to XYZ’s two departments for the month of January: Mixing Bottling Cases of cola in work in process, January 1................................... 25,000 9,000 Cases of cola completed/transferred out during January.......................... 110,000 ? Cases of cola in work in process, January 31................................. 7,000 19,000 How many cases of cola were completed and transferred to Finished Goods Inventory during January?
Health beverages company uses a process costing system to collect costs
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Chrome Solutions Company manufactures special chromed parts made to the order and specifications of the customer. It has two production departments, Stamping and Plating, and two service departments, Power and Maintenance. In any production department, the job in process is wholly completed before the next job is started. The company operates on a fiscal year, which ends September 30. Following is the post-closing trial balance as of September 30: Additional information: The balance of the materials account represents the following: The company uses the FIFO method of accounting for all inventories. Material A is used in the Stamping Department, and materials B and C are used in the Plating Department. The balance of the work in process account represents the following costs that are applicable to Job 905. (The customer’s order is for 1,000 units of the finished product.) The finished goods account reflects the cost of Job 803, which was finished at the end of the preceding month and is awaiting delivery orders from the customer. At the beginning of the year, factory overhead application rates were based on the following data: In October, the following transactions were recorded: Purchased the following materials and supplies on account: The following materials were issued to the factory: Customers’ orders covered by Jobs 1001 and 1002 are for 1,000 and 500 units of finished product, respectively. Factory wages and office, sales, and administrative salaries are paid at the end of each month. (Assume FICA and federal income tax rates of 8% and 10%, respectively.) Record the company’s liability for state and federal unemployment taxes. (Assume rates of 4% and 1%, respectively, and that none of the employees had reached the $8,000 limit.) Record the payroll distribution for October. Wages of the supervisors, custodial personnel, etc., totaled $9,500; administrative salaries were $18,300. Miscellaneous factory overhead incurred during October totaled $4,230. Miscellaneous selling and administrative expenses were $1,500. These items as well as the FICA tax and federal income tax withheld for September were paid. (See account balances on the post-closing trial balance for September 30.) Annual depreciation on plant assets is calculated using the following rates (round to nearest dollar): Factory buildings–5% Machinery and equipment–20% Office equipment–20% The balance of the prepaid insurance account represents a three-year premium for a fire insurance policy covering the factory building and machinery. It was paid on the last day of the preceding month and became effective on October 1. The summary of factory overhead prepared from the factory overhead ledger is reproduced here: The total expenses of the Maintenance Department are distributed on the basis of floor space occupied by the Power Department (8,820 sq ft), Stamping Department (19,500 sq ft), and Plating Department (7,875 sq ft). The power department expenses are then allocated equally to the Stamping and Plating departments. After the actual factory overhead expenses have been distributed to the departmental accounts and the applied factory overhead has been recorded and posted, any balances in the departmental accounts are transferred to Under- and Overapplied Overhead. Jobs 905 and 1001 were finished during the month. Job 1002 is still in process at the end of the month. During the month, Jobs 803 and 905 were sold with a mark-on percentage of 50% on cost. Received $55,500 from customers in payment of their accounts. Checks were issued in the amount of $43,706 for payment of the payroll. Required: Set up the beginning trial balance in T-accounts. Prepare materials inventory ledger cards and enter October 1 balances. Prepare a Payroll Summary and Schedule of Earnings and Payroll Taxes for the month of October. Set up job cost sheets as needed. Record all transactions and related entries for October and post to T-accounts. Prepare a service department expense distribution worksheet for October. At the end of the month: Analyze the balance in the materials account, the work in process account, and the finished goods account. Prepare the statement of cost of goods manufactured for the month ended October 31.
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