Problem - Smith Steel
Smith Steel Company uses a process cost system to record the costs of manufacturing aluminum which requires a series of five processes. The inventory of Work in Process - Rolling (the last process) on September 1 and debits the account during September were as follows:
|
|
|
Balance
|
|
Item
|
Debit
|
Credit
|
Debit
|
Credit
|
|
Balance, 1,200 units, ¾ completed
|
|
|
$31,500
|
|
|
From Smelting, 4,900 units
|
$44,100
|
|
|
|
|
Direct labor
|
70,000
|
|
|
|
|
Factory overhead
|
37,100
|
|
|
|
During September, 1,200 units in process on September 1 were completed, and of the 4,900 units entering the department, all were completed except 400 units that were ¾ completed.
Charges to Work in Process - Rolling for October were as follows:
|
|
|
Balance
|
|
Item
|
Debit
|
Credit
|
Debit
|
Credit
|
|
From Smelting, 5,000 units
|
$47,500
|
|
|
|
|
Direct labor
|
65,000
|
|
|
|
|
Factory overhead
|
36,640
|
|
|
|
During October, the units in process at the beginning of the month were completed, and of the 5,000 units entering the department, all were completed except 800 units that were ? completed.
Required:
1. Prepare a cost of production report for the month of September and identify the amount transferred from WIP to Finished Good Inventory.
2. Prepare a cost of production report for the month of October and identify the amount transferred from WIP to Finished Good Inventory.