Question

7. Mocha Company manufactures a single product by a continuous process, involving three production

departments. The records indicate that direct materials, direct labor, and applied factory overhead for

Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that

direct materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and

$70,000, respectively. Department 2 has transferred-in costs of $390,000 for the current period. In

addition, work in process at the beginning of the period for Department 2 totaled $75,000, and work in

process at the end of the period totaled $90,000. The journal entry to record the flow of costs into

Department 3 during the period is

a.

Work in Process—Department 3 375,000

Work in Process—Department 2 375,000

b.

Work in Process—Department 3 570,000

Work in Process—Department 2 570,000

c.

Work in Process—Department 3 490,000

Work in Process—Department 2 490,000

d.

Work in Process—Department 3 555,000

Work in Process—Department 2 555,000

Answer 1

Costs transferred from department 2 to department 3 are:

Department 2	Amount
Beginning work in process	$          75,000
Add:
Transferred in costs	$        390,000
Direct materials	$          50,000
Direct labor	$          60,000
Overhead applied	$          70,000
Less:
Ending work in process	$         (90,000)
Transferred to Department 3	$        555,000

Entry to record transfer is:

Work in Process—Department 3 555,000

Work in Process—Department 2 555,000