Question

Gardner Company produces 18-ounce boxes of a wheat cereal in three departments: mixing, cooking, and packaging. During August, Gardner produced 100,000 boxes with the following costs:

	Mixing	Cooking	Packaging
	Department	Department	Department
Direct materials	$412,200	$186,600	$165,800
Direct labor	60,200	38,400	90,300
Applied overhead	74,000	40,500	115,750

Required:

1.	Calculate the costs transferred out of each department.
2.	Prepare journal entries that reflect these cost transfers.

CHART OF ACCOUNTS
Gardner Company
General Ledger
ASSETS 110 Cash 120 Accounts Receivable 130 Raw Materials 142 Work in Process-Cooking 143 Work in Process-Mixing 144 Work in Process-Packaging 150 Overhead Control 160 Finished Goods 180 Accumulated Depreciation LIABILITIES 210 Accounts Payable 220 Wages Payable 230 Utilities Payable 240 Lease Payable 250 Other Payables EQUITY 310 Common Stock 320 Retained Earnings	REVENUE 410 Sales EXPENSES 510 Cost of Goods Sold 520 Insurance Expense 530 Wages Expense 540 Supplies Expense 550 Utilities Expense 560 Depreciation Expense 590 Miscellaneous Expense

1. Calculate the costs transferred out of each department.

(a) Costs transferred out of the Mixing Department:

(b) Costs transferred out of the Cooking Department:

(c) Costs transferred out of the Packaging Department:

2. Prepare journal entries on Aug. 31 that reflect these cost transfers. Refer to the Chart of Accounts for the exact wording of account titles.

PAGE 15

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6

Answer 1

Credit Requirement (1) Computation of Cost transferred out of each department Particulars Mixing Cooking Packaging Cost transferred In $0 $546,400 $811,900 Direct materials $412,200 $186,600 $165,800 Direct labor $60,200 $38,400 $90,300 Overhead applied $74,000 $40,500 $115,750 Requirement (2) Event Particulars 1 Work In Process - Cooking Work In Process - Mixing Debit $546,400 $546,400 2 Work In Process - Packaging Work In Process - Cooking $811,900 $811,900 Cost transferred out $546,400 $811,900 $1,183,750 3 Finished goods inventory Work In Process - Packaging $1,183,750 Please comment down for any further clarifications $1,183,750