Chapter 4, Problem 35P

GroFast Company manufactures a high-quality fertilizer, which is used primarily by commercial vegetable growers. Two departments are involved in the production process. In the Mixing Department, various chemicals are entered into production. After processing, the Mixing Department transfers a chemical called Chemgro to the Finishing Department. There the product is completed, packaged, and shipped under the brand name Vegegro.

In the Mixing Department, the raw material is added at the beginning of the process. Labor and overhead are applied continuously throughout the process. All direct departmental overhead is traced to the departments, and plant overhead is allocated to the departments on the basis of direct-labor. The plant overhead rate for 20x2 is $.40 per direct-labor dollar.

The following information relates to production during November 20x2 in the Mixing Department.

1. a. Work in process, November 1 (4,000 pounds, 75 percent complete as to conversion):

1. b. Raw material:

1. c. Direct-labor cost, $103,350
2. d. Direct departmental overhead costs, $52,000
3. e. Transferred to Finishing Department, 15,000 pounds
4. f. Work in process, November 30, 5,000 pounds, 20 percent complete

The company uses weighted-average process costing to accumulate product costs. However, for raw-material inventories, the firm uses the FIFO (i.e., first in, first out) inventory method.

Required:

1. 1. Prepare a production report for the Mixing Department for November 20x2. The report should show:
   1. a.      Equivalent units of production by cost factor (i.e., direct material and conversion).
   2. b.      Cost per equivalent unit for each cost factor. (Round your answers to the nearest cent.)
   3. c.       Cost of Chemgro transferred to the Finishing Department.
   4. d.      Cost of the work-in-process inventory on November 30, 20x2, in the Mixing Department.
2. 2. Prepare journal entries to record the following events:
   1. a.      Release of direct material to production during November.
   2. b.      Incurrence of direct-labor costs in November.
   3. c.       Application of overhead costs for the Mixing Department (direct departmental and allocated plant overhead costs.)
   4. d.      Transfer of Chemgro out of the Mixing Department.