Question

Major League Bat Company manufactures baseball bats. In addition to its work in process inventories, the company maintains inventories of raw materials and finished goods. It uses raw materials as direct materials in production and as indirect materials. Its factory payroll costs include direct labor for production and indirect labor. All materials are added at the beginning of the process, and conversion costs are applied uniformly throughout the production process.

Required:

You are to maintain records and produce measures of inventories to reflect the July events of this company. The June 30 balances: Raw Materials Inventory, $22,000; Work in Process Inventory, $9,690 ($2,810 of direct materials and $6,880 of conversion); Finished Goods Inventory, $140,000; Sales, $0; Cost of Goods Sold, $0; Factory Payroll Payable, $0; and Factory Overhead, $0.

1. Prepare journal entries to record the following July transactions and events.

1. Purchased raw materials for $130,000 cash (the company uses a perpetual inventory system).
2. Used raw materials as follows: direct materials, $52,540; and indirect materials, $11,500.
3. Recorded factory payroll payable costs as follows: direct labor, $206,000; and indirect labor, $26,500.
4. Paid factory payroll cost of $232,500 with cash (ignore taxes).
5. Incurred additional factory overhead costs of $83,000 paid in cash.
6. Allocated factory overhead to production at 50% of direct labor costs.

2. Information about the July inventories follows. Use this information with that from part 1 to prepare a process cost summary, assuming the weighted-average method is used. (Round "Cost per EUP" to 2 decimal places.)

     

     
    

3. Using the results from part 2 and the available information, make computations and prepare journal entries to record the following:

7. Total costs transferred to finished goods for July.
8. Sale of finished goods costing $273,200 for $640,000 in cash.

4. Post entries from parts 1 and 3 to the following general ledger accounts.

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Major League Bat Company manufactures baseball bats. In addition to its work in process inventories, the company maintains inventories of raw materials and finished goods. It uses raw materials as direct materials in production and as indirect materials. Its factory payroll costs include direct labor for production and indirect labor. All materials are added at the beginning of the process, and conversion costs are applied uniformly throughout the production process.

Required:

You are to maintain records and produce measures of inventories to reflect the July events of this company. The June 30 balances: Raw Materials Inventory, $22,000; Work in Process Inventory, $9,690 ($2,810 of direct materials and $6,880 of conversion); Finished Goods Inventory, $140,000; Sales, $0; Cost of Goods Sold, $0; Factory Payroll Payable, $0; and Factory Overhead, $0.

1. Prepare journal entries to record the following July transactions and events.

1. Purchased raw materials for $130,000 cash (the company uses a perpetual inventory system).
2. Used raw materials as follows: direct materials, $52,540; and indirect materials, $11,500.
3. Recorded factory payroll payable costs as follows: direct labor, $206,000; and indirect labor, $26,500.
4. Paid factory payroll cost of $232,500 with cash (ignore taxes).
5. Incurred additional factory overhead costs of $83,000 paid in cash.
6. Allocated factory overhead to production at 50% of direct labor costs.

2. Information about the July inventories follows. Use this information with that from part 1 to prepare a process cost summary, assuming the weighted-average method is used. (Round "Cost per EUP" to 2 decimal places.)

     

     
    

3. Using the results from part 2 and the available information, make computations and prepare journal entries to record the following:

7. Total costs transferred to finished goods for July.
8. Sale of finished goods costing $273,200 for $640,000 in cash.

4. Post entries from parts 1 and 3 to the following general ledger accounts.

- Raw materials inventory

-work in process inventory

- finished goods inventory

- factory wages payable

- sales

- cost of goods sold

- factory overhead

5. Compute the amount of gross profit from the sales in July. (Add any underapplied overhead to, or deduct any overapplied overhead from, the cost of goods sold.)

5. Compute the amount of gross profit from the sales in July. (Add any underapplied overhead to, or deduct any overapplied overhead from, the cost of goods sold.)

Answer 1

Ques 2
	MAJOR LEAGUE BAT CO.
	Process Cost Summary (Weighted Average)
	For Month Ended July 31
	Costs Charged to Production
	Costs of beginning goods in process
	Direct materials			$2,810
	Conversion costs			6,880
						$9,690
	Costs incurred this period
	Direct materials			52,540
	Direct labor			206,000
	Factory overhead			103,000		361,540
	Total costs to account for					$371,230
	Unit cost information
	Units to account for		Units accounted for
	Beginning goods in process	6,500	Complete & transferred out				12,500
	Units started this period	14,000	Ending goods in process				8,000
	Total units to account for	20,500	Total units accounted for				20,500
			Direct Materials		Convestion
	Equivalent units of production
	Units completed & transferred out		12,500		12,500
	Units of ending goods in process
	Direct materials (8,000 x 100%)		8,000
	Conversion (8,000 x 30%)				2400
	Equivalent units of production		20,500		14,900
			Direct Materials		Convestion
	Cost per EUP
	Cost of beginning goods in process		$2,810		$6,880
	Costs incurred this period		52,540		309,000
	Total costs		$55,350		$315,880
	÷ EUP		20,500		14,900
	Cost per EUP		2.7		21.2
	(Using weighted-average)
	Cost assignment and reconciliation
	Costs transferred out
	Direct materials (12,500EUP x $2.70 per EUP)		$33,750
	Conversion (12,500 EUP x $21.20 per EUP)		265,000
				$298,750
	Costs of ending goods in process
	Direct materials (8,000 EUP x $2.70 per EUP)		21,600
	Direct labor (2,400 EUP x $21.20 per EUP)		50,880
				72,480
	Total costs accounted for			$371,230