Toll House makes chocolate chip cookies. The cookies pass through three production processes: mixing the cookie dough, baking, and packaging. Toll House uses process costing.
The following are data concerning the costs incurred in each process during May, along with the number of units processed:
| Mixing | Baking | Packaging |
Direct materials | $3,600 | $ 0 | $1,020 |
Direct labor | 3,000 | 1,800 | 2,100 |
Manufacturing overhead | 6,000 | 12,000 | 1,200 |
Output | 14,000 lbs. | 4,000 gross* | 48,000 boxes |
*A gross is 12 dozen.
To ensure freshness, cookies are baked and packaged on the same day that the dough is mixed.Thus the company has no inventory still in process at the end of a business day.
Instructions
a. Prepare a separate journal entry summarizing the costs incurred by the Mixing Department in preparing 14,000 pounds of cookie dough in May. In the explanation of your entry, indicate the department's unit cost.
b. Prepare the month-end entry recording the transfer of cookie dough to the Baking Department during May.
c. Prepare a journal entry summarizing the costs incurred by the Baking Department in May (excluding the costs transferred from the Mixing Department). In the explanation, indicate the cost per gross of the baking process.
d. Prepare the month-end entry recording the transfer of cookies from the Baking Department to the Packaging Department in May.
e. Prepare a journal entry summarizing the costs incurred by the Packaging Department in May. In the explanation, indicate the packaging cost per box.
f. Prepare the month-end entry to record the transfers in May of boxes of cookies from the Packaging Department to the finished goods warehouse. In the explanation, indicate the total cost per box transferred.
g. Briefly explain how management will use the unit cost information appearing in entries a, c, e, and f.
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