Question

Vasquez Systems produces high-quality table tops. Each table top is produced from a single large tree in a 3-step process consisting of milling, sanding, and cutting. All raw material is introduced at the start of the milling process. The company uses a process costing system for all costs incurred throughout the production cycle. The following data were extracted from each department's cost of production report prepared for April:

Milling Dept. The beginning balance of work in process was $280,000. During April, additional costs of $695,000 were incurred. The additional costs were attributable to direct materials (80%), direct labor (10%), and factory overhead (10%). The ending balance of work in process was $165,000.

Sanding Dept. The beginning balance of work in process was $180,000. During April, additional costs of

$410,000 were incurred. The additional costs were attributable to direct labor (80%) and factory overhead (20%). The ending balance of work in process was $295,000.

Cutting Dept. The beginning balance of work in process was $370,000. During April, additional costs of

$160,000 were incurred. The additional costs were attributable to direct labor (70%) and factory overhead (30%). The ending balance of work in process was $220,000.

Calculate the transfer of costs between departments and into finished goods.

	A.	From Milling to Sanding 865,000 From Sanding to Cutting 1,147,000 From Cutting to Finished Goods 1,448,000
	B.	From Milling to Sanding 804,000 From Sanding to Cutting 1,085,000 From Cutting to Finished Goods 1,165,000
	C.	From Milling to Sanding 865,000 From Sanding to Cutting 1,156,000 From Cutting to Finished Goods 1,408,000
	D.	From Milling to Sanding 810,000 From Sanding to Cutting 1,105,000 From Cutting to Finished Goods 1,415,000
	E.	From Milling to Sanding 804,000 From Sanding to Cutting 1,101,000 From Cutting to Finished Goods 1,476,000
	F.	None of the above

Answer 1

Option D is correct i.e:

From Milling to Sanding	810,000
From Sanding to Cutting	1,105,000
From Cutting to Finished Goods	1,415,000

Explanations:-

From Milling to Sanding :-

Beginning WIP	$280000
Add: Additional Cost incurred	$695000
Less: Ending WIP	$165000
	$810000

From Sanding to Cutting :-

Cost transferred from Milling Dept	$810000
Add: Beginning WIP	$180000
Add: Additional Cost incurred	$410000
Less: Ending WIP	$295000
	$1105000

From Cutting to Finished Goods:-

Cost transferred from Sanding Dept	$1105000
Add: Beginning WIP	$370000
Add: Additional Cost incurred	$160000
Less: Ending WIP	$220000
	$1415000