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Concept explainers
(1) Computation of (a) Production Costs transferred from Cutting to Stitching, (b)Production Costs Transferred from Stitching to Finished Goods and (c) Cost of goods Sold
Concept Introduction:
Production Cost Flow:
In a production unit, finished goods need to pass through a number of departments until they are ready, thus the costs incurred in each department help to understand the total cost incurred to produced the goods.
Requirement 1
To Determine:
- Production Cost Transferred from Cutting to Stitching
- Production Cost Transferred from Stitching to Finished Goods
- Cost of Goods Sold
(1) Computation of (a) Production Costs transferred from Cutting to Stitching, (b)Production Costs Transferred from Stitching to Finished Goods and (c) Cost of goods Sold
![Check Mark](/static/check-mark.png)
Answer to Problem 1APSA
- Production Cost transferred from Cutting to Stitching=$61975
- Production Cost Transferred from Stitching to Finished Goods=$202055
- Cost of Goods Sold=$213905
Explanation of Solution
Explanation:
Work In Process Inventory-Cutting | |||
Particulars | Amount | Particulars | Amount |
Beginning Balance | 43500 | Production Cost Transferred to Stitching Department | 61975 |
Direct Materials Used-Cutting | 21750 | ||
Direct Labour-Cutting | 15600 | ||
Factory Overhads(Budgeted) | 32625 | Ending Balance | 51500 |
(150% of Direct Materials) | |||
113475 | 113475 |
Work in process Inventory-Stitching | |||
Particulars | Amount | Particulars | Amount |
Beginning Balance | 63300 | Production Cost Transferred to Finished Goods | 202055 |
Production Cost from Cutting Department | 61975 | ||
Direct Materials Used-Stitching | 0 | ||
Direct Labour-Stitching | 62400 | ||
Factory Overhads(Budgeted) | 74880 | Ending Balance | 60500 |
(120% of Direct Labour) | |||
262555 | 262555 |
Particulars | Amount | Particulars | Amount |
Beginning Balance | 20100 | Cost of Goods Sold | 213905 |
Production Cost from Stitching Department | 202055 | ||
Ending Balance | 8250 | ||
222155 | 222155 |
- Journal Entries to record the flow of cost
Concept Introduction:
Production Cost Flow:
In a production unit, finished goods need to pass through a number of departments until they are ready, thus the costs incurred in each department help to understand the total cost incurred to produced the goods.
Requirement 2
To Determine:
- Journal Entries to record the flow of cost
![Check Mark](/static/check-mark.png)
Answer to Problem 1APSA
Date | Particulars | Debit | Credit |
31-Mar | Raw Material Inventory | 25000 | |
To Accounts Payable | 25000 | ||
(Being Raw Materials Purchased) | |||
31-Mar | Work in Process Inventory-Cutting | 21750 | |
Work in Process Inventory-Stitching | 15600 | ||
To Raw Materials Inventory | 37350 | ||
(Being Raw Materials Consumed) | |||
31-Mar | Factory | 6000 | |
To Raw Materials Inventory | 6000 | ||
(Being Indirect Materials Consumed) | |||
31-Mar | Direct Labour-Cutting | 0 | |
Direct Labour-Stitching | 62400 | ||
To Salaries And Wages | 62400 | ||
(Being Wages Charged to Cutting and Stitching) | |||
31-Mar | Factory Overheads | 55000 | |
To Salaries and Wages | 55000 | ||
(Being Indirect Labour Charged to Factory Overheads) | |||
31-Mar | Salaries and Wages | 133000 | |
To Cash | 133000 | ||
(Being Salaries and Wages Paid) | |||
31-Mar | Factory Overheads | 47000 | |
To Accounts Payable | 47000 | ||
(Being Factory Overheads Paid) | |||
31-Mar | Work in Process Inventory-Cutting | 32625 | |
Work in Process Inventory-Stitching | 74880 | ||
To Factory Overheads | 107505 | ||
(Being Factory Overheads Applied) | |||
31-Mar | Work in Process Inventory-Stitching | 61975 | |
To Work in process Inventory-Cutting | 61975 | ||
(Being Production cost of cutting transferred to Stitching Dept) | |||
31-Mar | Work in Process Inventory-Cutting | 202055 | |
To Finished Goods Inventory | 202055 | ||
(Being Production cost of Stitching transferred to Finished Goods Inventory) | |||
31-Mar | Finished Goods Inventory | 213905 | |
To Cost of Sales | 213905 | ||
(Being Cost of Goods Sold) | |||
31-Mar | 256000 | ||
To Sales | 256000 | ||
(Being Sales Made) |
Explanation of Solution
The above entries have been passed for respective transactions as per questions.
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Chapter 20 Solutions
Connect Access Card For Fundamental Accounting Principles
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