Smith'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:

Requirements
1. Draw a timeline for the Preparation Department.
2. Use the timeline to help you compute the equivalent.
3. Compute the total costs of the units (sheets)
a. completed and transferred out to the Compression Department.
b. in the Preparation Department's ending Work in process inventory.
4. Prepare the journal entry to record the cost of the sheets completed and transferred out to the Compression Department.
5. Post the journal entries to the Work in process inventory'Preparation T-account. What is the endingbalance?

Transcribed Image Text:

Sheets Beginning work in process inventory Started production Completed and transferred out to Compression in January Costs O sheets Beginning work in process inventory $ 3,700 sheets Costs adding during January: 3,108 1,240 Wood 2,000 sheets Adhesives Direct labor Manufacturing overhead 558 1,450 $ 6,356 Ending work in process inventory (30% of the way through preparation process) 1,700 sheets Total costs