Snack Happy makes chocolate brownies. The brownies pass through three production processes: mixing the batter, baking, and packaging. The company uses process costing.
The following are data concerning the costs incurred in each process during August, along with the number of units processed:
| Mixing | Baking | Packaging |
Direct materials | $25,000 | $0 | $ 3,000 |
Direct labor | 60,000 | 40,000 | 14,000 |
Manufacturing overhead | 35,000 | 50,000 | 7,000 |
Output | 20,000 lbs. | 5,000 gross* | 12,000 cases |
*A gross is 12 dozen.
To ensure freshness, brownies are baked and packaged on the same day that the batter 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 20,000 pounds of batter in August. In the explanation of your entry, indicate the department's unit cost.
b. Prepare the month-end entry recording the transfer of batter to the Baking Department during August.
c. Prepare a journal entry summarizing the costs incurred by the Baking Department in August (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 brownies from the Baking Department to the Packaging Department in August.
e. Prepare a journal entry summarizing the costs incurred by the Packaging Department in August. In the explanation, indicate the packaging cost per case.
f. Prepare the month-end entry to record the transfers in August of cases of brownies from the Packaging Department to the finished goods warehouse. In the explanation, indicate the total cost per case transferred.
g. Briefly explain how management will use the unit cost information appearing in entries a. c. e, and f.
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