Question

PART 1

Blackwelder Factory 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 3375,000

Work in Process—Department 2375,000

b.

Work in Process—Department 3555,000

Work in Process—Department 2555,000

c.

Work in Process—Department 3490,000

Work in Process—Department 2490,000

d.

Work in Process—Department 3570,000

Work in Process—Department 2570,000

PART 2

Blackwelder Factory produces two similar products-small lamps and desk lamps. The total plant overhead budget is $654,000 with 513,000 estimated direct labor hours. It is further estimated that small lamp production will require 271,000 direct labor hours and desk lamp production will need 242,000 direct labor hours.

Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will Blackwelder Factory allocate to small lamp production if actual direct hours for the period is 235,000?

a.$298,450

b.$754,187

c.$635,083

d.$732,372

Answer 1

Part 1

Flow of costs to Department 3 from Department 2 = Work in process, beginning of Department 2 + Direct materials + Direct labor + Factory overhead applied + transferred-in costs - Work in process, ending of Department 2

= 75,000 + 50,000 + 60,000 + 70,000 + 390,000 - 90,000

= $555,000

Hence, The journal entry to record the flow of costs into Department 3 during the period is

Work in Process—Department 3 $ 555,000

Work in Process—Department 2 $ 555,000

Correct option is (b)

Part 2

Predetermined overhead rate = Estimated overheads/Estimated direct labor hours

= 654,000/513,000

= $1.27

Applied overhead to small lamp production = Predetermined overhead rate x actual direct hours

= 1.27 x 235,000

= $298,450

Correct option is (a)

Kindly comment if you need further assistance. Thanks