Smith Paper Co. produces the paper used by wallpaper manufacturers. Smith’s four-stage process includes mixing, cooking, rolling, and cutting. On March 1, the Mixing Department had 400 rolls in process. During March, the Mixing Department completed the mixing process for those 400 rolls and also started and completed the mixing process for an additional 4,100 rolls of paper. The department started but did not finish the mixing process for an additional 500 rolls, which were 20% complete with respect to both direct materials and conversion work at the end of March. Direct materials and conversion costs are incurred evenly throughout the mixing process. The Mixing Department compiled the following data for March:

	Direct materials	Direct labor	Manufacturing overhead allocated	Total costs
Beginning inventory, Mar. 1	\(475	\)275	\(300	\)1,050
Costs added during March	5,045	2,900	2,965	10,910
Total costs	\(5,520	\)3,175	\(3,265	\)11,960

Requirements

1. Prepare a production cost report for the Mixing Department for March. The company uses the weighted-average method.

2. Journalize all transactions affecting the company’s mixing process during March. Assume labor costs are accrued and not yet paid.

Step by step solution

01

Step-by-Step Solution:Step 1: Production Cost Report

A production cost report is a report which shows the direct material, conversion cost and the total cost of a product. It is mainly prepared by companies with a certain number of production processes.

02

Equivalent unit of production for direct material

$$\begin{gathered} \mathbf{EUP}\mathbf{}\mathbf{for}\mathbf{}\mathbf{direct}\mathbf{}\mathbf{material}\mathbf{=}(\mathbf{Completed}\mathbf{}\mathbf{units}\mathbf{\times }\mathbf{Completion}\mathbf{\%})\mathbf{+}(\mathbf{Ending}\mathbf{}\mathbf{WIPunits}\mathbf{\times }\mathbf{Completion}\mathbf{\%}) \\ \mathbf{=}(\mathbf{4}\mathbf{,}\mathbf{500}\mathbf{\times }\mathbf{100}\mathbf{\%})\mathbf{+}(\mathbf{500}\mathbf{\times }\mathbf{20}\mathbf{\%}) \\ \mathbf{=}\mathbf{4}\mathbf{,}\mathbf{600} \end{gathered}$$

03

Equivalent unit of production for conversion costs

$$\begin{gathered} \mathbf{EUP}\mathbf{}\mathbf{for}\mathbf{}\mathbf{Conversion}\mathbf{}\mathbf{cost}\mathbf{=}(\mathbf{Completed}\mathbf{}\mathbf{units}\mathbf{\times }\mathbf{Completion}\mathbf{\%})\mathbf{+}(\mathbf{Ending}\mathbf{}\mathbf{WIP}\mathbf{}\mathbf{units}\mathbf{\times }\mathbf{Completion}\mathbf{\%}) \\ \mathbf{=}(\mathbf{4}\mathbf{,}\mathbf{500}\mathbf{\times }\mathbf{100}\mathbf{\%})\mathbf{+}(\mathbf{500}\mathbf{\times }\mathbf{20}\mathbf{\%}) \\ \mathbf{=}\mathbf{4}\mathbf{,}\mathbf{600} \end{gathered}$$

04

Journal entries

Date	Particulars	Debit ($)	Credit ($)
1.	WIP Inventory-Mixing department	5,045
	Raw material		5,045
2.	WIP inventory-Mixing department	2,900
	Wages payable		2,900
3.	WIP inventory – mixing department	2,965
	Manufacturing overhead		2,965
4.	WIP inventory-cooking department	11,700
	WIP inventory – mixing department		11,700

Unlock Step-by-Step Solutions & Ace Your Exams!

• Full Textbook Solutions

  Get detailed explanations and key concepts

• Unlimited Al creation

  Al flashcards, explanations, exams and more...

• Ads-free access

  To over 500 millions flashcards

• Money-back guarantee

  We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!