Work in Process Inventory Accounts in Process Costing Systems
E 3. Gilbert, Inc., which uses a process costing system, makes a chemical used as a food preservative. The manufacturing process involves Departments A and B. The company had the following total costs and unit costs for completed production last month, when it manufactured 10,000 pounds of the chemical. Neither Department A nor Department B had any beginning or ending work in process
inventories.
Total Cost Unit Cost
Department A
Direct materials $10,000 $1.00
Direct labor 2,600 0.26
Overhead 1.300 0.13
Total costs $13,900 $1.39
Department B
Direct materials $ 3,000 $0.30
Direct labor 700 0.07
Overhead 1,000 0.10
Total costs $ 4,700 $0.47
Totals $18,600 $1.86
1. How many Work in Process Inventory accounts would Gilbert use?
2. What dollar amount of the chemical's production cost was transferred from Department A to Department B last month?
3. What dollar amount was transferred from Department B to the Finished Goods Inventory account?
4. What dollar amount is useful in determining a selling price for 1 pound of the chemical?