Prior Manufacturing Company produces a product in two departments: (1) Mixing and (2) Finishing. The company uses a process cost accounting system.

(a)    Purchased raw materials for $50,000 on account.

(b)    Raw materials requisitioned for production were:

                  Direct materials

                          Mixing department                                                                       $20,000

                          Finishing department                                                                      14,000

(c)     Incurred labor costs of $64,000.

(d)    Factory labor used:

                  Mixing department                                                                               $39,000

                  Finishing department                                                                              25,000

(e)    Manufacturing overhead is applied to the product based on machine hours used in each department:

                  Mixing department-400 machine hours at $30 per machine hour.

                  Finishing department-500 machine hours at $20 per machine hour.

(f)     Units costing $56,000 were completed in the Mixing Department and were transferred to the Finishing Department.

(g)    Units costing $60,000 were completed in the Finishing Department and were transferred to finished goods.

(h)    Finished goods costing $30,000 were sold on account for $45,000.

Instructions

Prepare the journal entries to record the preceding transactions for Prior Manufacturing Company.

EXERCISE 2

Reymont Manufacturing Industries uses a process cost system. Products are processed first by Department A, second by Department B, and then they are transferred to the finished goods warehouse. Shown below is the cost information for Department B during the month of October:

Costs of units transferred in                                                                                                                                  $120,000

Manufacturing costs added in Department B:

          Direct materials                                                                                                               $60,000

          Direct labor                                                                                                                            6,000

          Manufacturing overhead                                                                                              19,000                       85,000

Total costs charged to Department B in October                                                                                          $205,000

The cost of work in process in Department B at October 1 is $25,000, and the cost of work in process at October 31 has been determined to be $30,000.

Instructions

Prepare journal entries to record for the month of October:

(a)      The transfer of production from Department A to B.

(b)      The manufacturing costs incurred by Department B.

(c)       The transfer of completed units from Department B to the finished goods warehouse.

EXERCISE 3

The Silver Plating Department of Botosan Manufacturing began the month of December with beginning work in process of 4,000 units that are 100% complete as to materials and 30% complete as to conversion costs. Units transferred out are 10,000 units. Ending work in process contains 5,000 units that are 100% complete as to materials and 60% complete as to conversion costs.

Instructions

Compute the equivalent units of production for materials and conversion costs for the month of December.