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Chapter 18: Q.18-7SE (page 1008)

Question: The Finishing Department of Lee and Lewis, Inc., the last department in the manufacturing process, incurred production costs of \(220,000 during the month of June.If the June 1 balance in Work-in-Process Inventory—Finishing is \)0 and the June 30balance is $70,000, what amount was transferred to Finished Goods Inventory?

Short Answer

Expert verified

Answer:

The amount transferred to the finished goods inventory account is $150,000

Step by step solution

01

Finished goods inventory

Finished goods inventory means the inventory which are completed in manufacturing. When the manufacturing process is completed, the WIP inventory balance of the completed goods are transferred to the finished goods inventory account.

02

Amount transferred to the finished goods inventory

Finishedgoodsinventory=BeginingbalanceofWIPInventory+Productioncostincurred-EndingbalanceofWIPInventory=$0+$220,0000-70,000=$150,000

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Most popular questions from this chapter

Ocean Worthy uses three processes to manufacture lifts for personal watercraft: forming a lift’s parts from galvanized steel, assembling the lift, and testing the completed lift. The lifts are transferred to Finished Goods Inventory before shipment to marinas across the country.

Ocean Worthy’s Testing Department requires no direct materials. Conversion costs are incurred evenly throughout the testing process. Other information follows for the month of August:

UNITS

Beginning work-in-process inventory

2,000 units

Transferred in from assembling department during the period

7,000 units

Completed during the period

4,000 units

Ending work in process inventory (40% complete for conversion work)

5,000 units

COSTS

Beginning work in process inventory (transferred in costs, \(93,400, conversion costs, \)18,100)

$111,500

Transferred in from the assembly department during the period

672,000

Conversion cost added during the period

54,000

The cost transferred into Finished Goods Inventory is the cost of the lifts transferred out of the Testing Department. Ocean Worthy uses weighted-average

process costing.

Requirements

1. Prepare a production cost report for the Testing Department.

2. What is the cost per unit for lifts completed and transferred out to Finished Goods Inventory? Why would management be interested in this cost?

Question: What are the four steps in preparing a production cost report?

Oxford Company had the following transactions in October:

1. Purchased raw materials on account, \(70,000

2. Used materials in production: \)26,000 in the Mixing Department; \(14,000 in the

Packaging Department; \)1,000 in indirect materials

3. Incurred labor costs: \(8,000 in the Mixing Department; \)7,200 in the Packaging

Department; \(2,200 in indirect labor

4. Incurred manufacturing overhead costs: \)3,500 in machinery depreciation; paid

\(2,300 for rent and \)1,590 for utilities

Prepare the journal entries for Oxford Company.

Match each costing system characteristic to job order costing, process costing, or both.

1. Used by companies that manufacture identical items through a series of uniform production steps or processes

2. Transfers costs from Work-in-Process Inventory to Finished Goods Inventory to Cost of Goods Sold

3. Used by companies that manufacture unique products or provide specialized services

4. Has multiple Work-in-Process Inventory accounts

5. Tracks direct materials, direct labor, and manufacturing overhead costs

The Finishing Department started the month with 500 units in process, received 2,000 units from the Assembly Department, and transferred 2,100 units to the finished goods storage area. All direct materials are added at the beginning of the process. The units in process at the end of the month are 45% complete concerning conversion costs. The department uses the weighted-average method. The Finishing Department incurred the following costs:

Beginning WIP

Added this month

Total

Transferred in

\(6,250

\)25,000

\(31,250

Direct materials

500

2,000

2,500

Conversion cost

1,250

5,590

6,840

Total

\)8,000

\(32,590

\)40,590

8. How many units are still in process at the end of the month?

9. Compute the equivalent units of production for the Finishing Department.

10. Determine the cost per equivalent unit for transfer, direct materials, and conversion costs.

11. Determine the cost to be transferred to Finished Goods Inventory.
See all solutions

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