Question

You Can Paint Too completed the following production cost re ducts. You Can Paint Too has two departments: Blending and ng of the blending procese ldveel and at the end of the packaging lending Departmer 0 Data Table - ach process. ment. Also, pr ny journal ent the assignment of martment. Assume la assignment of direct 0 gallons 9,000 gallons 4,000 gallons 5,000 gallons Gallons Beginning Work-in-Process Inventory Started in production Completed and transferred out to Packaging in May Ending Work-in-Process Inventory (30% of the way through the blending process) Costs Beginning Work-in-Process Inventory Costs added during May: Direct materials Direct labor Manufacturing overhead allocated Total costs added during May $ 0 6,750 1,300 2,000 10,050 $ Print Done the input fields and the room Clear All

Answer 1

Answer is given below

Credit Debit $6,750 Date Accounts May-31 Work in process - Blending Department To Raw Material inventory |(To record issue of material to work in process) $6,750 Credit Debit $1,300 Date Accounts May-31 Work in process - Blending Department To Wages payable (To record direct labor incurred on work in process) $1,300 Credit Debit $2,000 Date Accounts May-31 Work in process - Blending Department To Manufacturing overhead (To record overhead applied to production) $2,000 Credit Debit $5,400 Date Accounts May-31 Work in process - Packaging Department To Work in process - Blending Department (To record transfer of completed units to Packaging dept) $5,400

Work in process Inventory - Blending Department Date Particulars Amount Date Particulars Amount May-01 Opening balance $0 May-01 Transfer to Packaging Dept $5,400 Direct Material $6,750 May 31 Closing balance $4,650 Direct labor $1,300 Overheads $2,000 $10,050 $10,050 Ending balance is $4,650 3 $1.35 Average cost of per gallon transferred to Packing department (Direct material + Direct labor + Manufacturing overheads) Total Equivalent Units Total Cost Completed and transferred cost $5,400 Average cost per gallon $1.35 4,000 Answer is Option D) Managers would like to know the average cost per gallon to find out the cost of units transferred to Packaging department Also Managers would like to know the cost of goods transferred and Closing inventory for external Financial reporting purpose