Question:
Oakley International Co. manufactures a single product in one department. Direct labor and overhead are added evenly throughout the process. Direct materials are added as needed. The company uses monthly reporting periods for its weighted-average process cost accounting. During March, Oakley completed and transferred 220,000 units of product to finished goods inventory. Its 10,000 units of beginning goods in process consisted of $16,800 of direct materials, $27,920 of direct labor, and $69,800 of factory overhead. 40,000 units (50% complete with respect to direct materials and 30% complete with respect to direct labor and overhead) are in process at month-end. After entries for direct materials, direct labor, and overhead for March, the company's Goods in Process Inventory account follows.
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Goods in Process Inventory
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Acct. No. 133
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Date
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Explanation
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Debit
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Credit
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Balance
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Mar.
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1
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Balance
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114,520
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31
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Direct materials
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223,200
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337,720
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31
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Direct labor
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352,560
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690,280
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31
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Applied overhead
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881,400
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1,571,680
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Assume that Oakley International uses the FIFO method to account for its process costing system. The following additional information is available.
Beginning goods in process consists of 10,000 units that were 75% complete with respect to direct materials and 60% complete with respect to direct labor and overhead.
Of the 220,000 units completed, 10,000 were from beginning goods in process; the remaining 210,000 were units started and completed during March.
Required
1. Prepare the company's process cost summary for March using FIFO. Round cost per EUP to one-tenth of a cent.
2. Prepare the journal entry dated March 31 to transfer the cost of completed units to finished goods inventory