Question

Dowton Company uses a process cost accounting system. Materials are added at the beginning of the process. Direct labor and Overhead are added evenly throughout the process. The following are the operating and cost data information for January. The January 1 Beginning Work In Process consisted of 10,000 units (40% complete)

The cost for this inventory include:

$40,000 of direct materials,

$30,000 of direct labor,

and $40,000 of factory overhead. In addition to the beginning inventory, the company started 60,000 units

They incurred the following cost into Work-In-Process Inventory:

Direct materials, $190,000

Direct labor, $ 90,000

Factory overhead, $140,000

During January, the company completed and transferred out 40,000 units of its product to finished goods. At the end of the month, the work in process inventory consisted of 30,000 units that were 70% complete with respect to conversion cost.

A) Prepare the company's process cost summary for January: The report should include all of the following:

a) Units to Account For and Units Accounted For

b) Find Equivalent Units

c) Cost to Account For

d) Cost per Equivalent Unit

e) Cost Accounted For

B) Prepare the Journal entry for the transfer to Finished Goods

Answer 1

A)Process cost summary:
	Phy.	DM	DL + F OH	Total Cost
WIP OP (units & Cost)	10000	0	6000	110000
STARTED & COMPL.	30000	30000	30000
TRANSFERRED OUT	40000
WIP CL	30000	30000	21000
EQUIVALENT UNITS		60000	57000
COST INCURRED		190000	230000	420000
COST TO ACCOUNT FOR				530000
COST PER EQUIVALENT UNIT		3.17	4.04
COST OF WIP OP		40000	70000	110000
ADD:added during Jan		0	24211	24211
Total Cost of WIP OP				134211
Cost of Started & Comp		95000	121053	216053
Cost of Transferred Out				350263
Cost of WIP CL		95000	84737	179737
COST ACCOUNTED FOR				530000

B) Journal Entry:
Date	Acc Title	Debit $	Credit$
31-Jan	Finished Goods Inventory	350263
	Work in Process		350263
	(finished goods transferred from WIP inventory)