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Lamont Company produced 80,000 machine parts for diesel engines. There were no beginning or ending work-in-process inventories in any department. Lamont incurred the following costs for May:

Molding Department Grinding Department Finishing Department
Direct materials $12,000 $5,300 $8,000
Direct labor 10,000 8,500 12,000
Applied overhead 17,000 15,000 11,000

Required:
a. Calculate the costs transferred out of each department.
b. Prepare the journal entries corresponding to these transfers.

Sagot :

abiolataiwo2015

Answer:

A. Molding Department $39,000

Grinding Department $69,800

Finishing Department $100,800

B. Dr Work in Process-Grinding $ $39,000

Cr Work in Process-Molding $39,000

Dr Work in Process-Finishing $69,800

Cr Work in Process-Grinding $69,800

Dr Finished Goods $100,800

Cr Work in Process-Finishing $100,800

Dr Work in Process-Grinding $30,800

Cr Materials $5,300

Cr Payroll 8,500

Cr Overhead Control $15,000

Explanation:

A. Calculation to determine the costs transferred out of each department.

Molding Department Grinding Department Finishing Department

Direct materials $12,000 $5,300 $8,000

Add Direct labor 10,000 8,500 12,000

Add Applied overhead 17,000 15,000 11,000

Total Cost Added $39,000 $30,800 $31,000

Costs transferred in $0 $39,000 $69,800

($39,000+$30,800=$69,800)

Costs transferred out

$39,000 $69,800 $100,800

($30,800+$39,000=$69,800)

($31,000+$69,800=$100,800)

B. Preparation of the journal entries corresponding to these transfers.

Dr Work in Process-Grinding $ $39,000

Cr Work in Process-Molding $39,000

Dr Work in Process-Finishing $69,800

Cr Work in Process-Grinding $69,800

Dr Finished Goods $100,800

Cr Work in Process-Finishing $100,800

Dr Work in Process-Grinding $30,800

Cr Materials $5,300

Cr Payroll 8,500

Cr Overhead Control $15,000

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