Bergeron's Exteriors produces exterior siding for homes. The Preparation Department begins with wood, which is chopped into small bits. At the end of the process, an adhesive is added. Then the wood/adhesive mixture goes on to the Compression Department, where the wood is compressed into sheets. Conversion costs are added evenly throughout the preparation process. January data for the Preparation Department are as follows:
UNITS
Beginning Work-in-Process Inventory .............................. 0 sheets
Started in production ................................................ 3,900 sheets
Completed and transferred out to Compression in January ... 2,700 sheets
Ending Work-in-Process Inventory (25% of the way through.. 1,200 sheets
the preparation process)
COSTS
Beginning Work-in-Process Inventory .................................... $ 0
Costs added during January:
Wood ......................................................................... 3,120
Adhesives .................................................................... 1,836
Direct labor ..................................................................... 990
Manufacturing overhead allocated ....................................... 2,100
Total costs .................................................................. $ 8,046
Requirements
1. Prepare a production cost report for the Preparation Department for January. The company uses the weighted-average method. (Each direct material added at a different point in the production process requires its own equivalent unit of production computation.)
2. Prepare the journal entry to record the cost of the sheets completed and transferred out to the Compression Department.
3. Post the journal entries to the Work-in-Process Inventory-Preparation T-account. What is the ending balance?