Question

AccuBlade Castings Inc. casts blades for turbine engines. Within the Casting Department, alloy is first melted in a crucible, then poured into molds to produce the castings. On May 1, there were 1,000 pounds of alloy in process, which were 60% complete as to conversion. The Work in Process balance for these 1,000 pounds was $93,600, determined as follows:

Direct materials (1,000 x $90)	$90,000
Conversion (1,000 x 60% x $6)	3,600
	$93,600

During May, the Casting Department was charged $808,400 for 9,400 pounds of alloy and $18,760 for direct labor. Factory overhead is applied to the department at a rate of 150% of direct labor. The department transferred out 9,700 pounds of finished castings to the Machining Department. The May 31 inventory in process was 40% complete as to conversion.

a1. Prepare the May journal entry for the Casting Department for the materials charged to production.

a2. Prepare the May journal entry for the Casting Department for the conversion costs charged to production. If an amount box does not require an entry, leave it blank.

a3. Prepare the May journal entry for the Casting Department for the completed production transferred to the Machining Department.

b. Determine the Work in Process—Casting Department May 31 balance.

c. Compute the change in the costs per equivalent unit for direct materials and conversion from the previous month (April).

	Cost per Equivalent Unit
Change in materials		$
Change in conversion

Answer 1

A)
a)	Account Titles & explanation	Debit	Credit
	Work in Process—Casting Department	$               808,400.00
	Materials—Alloy		$                  808,400.00
b)	Work in Process—Casting Department	$                 46,900.00
	Wages Payable		$                    18,760.00
	Factory Overhead ($22,651 x 150%)		$                    28,140.00
c)	Work in Process—Machining Department	$               888,176.40
	Work in Process—Casting Department		$                  888,176.40
	Cost of 9700 transferred-out pounds:
	Inventory in process, May 1	$                 93,600.00
	Cost to complete May 1 inventory (1000 x 60% x $4.99)	$                   2,992.03
	Pounds started and completed in May [8700 lbs. × ($86 + $4.99)]	$               791,584.37
	Transferred to Machining Department	$               888,176.40
	Equivalent unit and cost per equivalent unit calculations:
				Equivalent Units
		Physical units	Material	Conversion
	Inventory in process, May 1  (60% completed)	1000.00	0.00	600.00
	Started and completed in May  (9700 -1000)	8700.00	8700.00	8700.00
	Transferred to Machining Department in may	9700.00	8700.00	9300.00
	Inventory in process, May 31 (15% completed) (1000+9400-9700)	700.00	700.00	105.00
	Total	10400.00	9400.00	9405.00
	Cost per equivalent unit of materials: = 808,400 /10400	86.00	Per Pound
	Cost per equivalent unit of conversion: 46,900/9405	4.99	Per pound
B)
	Direct materials (700 × $86)	$                 60,200.00
	Conversion (700 × 15% × $4.99)	$                      523.60
	Work in Process-Casting Department May 31 balance	$                 60,723.60
C)
Materials	From current period	$                        86.00
	From beginning inventory	$                        90.00
	Increase	$                        -4.00
Conversion	From current period	$                          4.99
	From beginning inventory	$                          6.00
	Increase	$                        -1.01
	The cost per equivalent unit of materials decreased by $4 per pound and the cost per equivalent unit of conversion cost decreased by $1.01per pound