The second department may be beyond the scope of most classes. Instructors may choose to assign only the requirements related to Department 1.

Patterson Laboratories, Inc., produces one of its products in two successive departments. All materials are added at the beginning of the process in Department 1; no materials are used in Department 2.

Conversion costs are incurred evenly in both departments. Patterson uses the weighted average method for process costing. January 1, 2016, inventory account balances are as follows:

During January, the following transactions occurred:
1. Purchased material on account, \($90,000\).
2. Placed \($84,000\) of material into process in Department 1. This \($84,000\) represents 24,000 units of materials.
3. Distributed total payroll costs: \($108,000\) of direct labor to Department 1, \($62,700\) of direct labor to Department 2, and \($51,000\) of indirect labor to Manufacturing Overhead.
4. Incurred other actual manufacturing overhead costs, \($81,000.\) (Credit Other Accounts.)
5. Applied overhead to the two processing departments: \($88,000\) to Department 1 and \($43,900\) to Department 2.
6. Transferred 25,000 completed units from Department | to Department 2. The 2,000 units remaining in Department 1 were 20% completed with respect to conversion costs.
7. Transferred 26,000 completed units from Department 2 to finished goods inventory. The 3,000 8. Sold 20,000 units on account at \($27\) per unit. Patterson uses FIFO inventory costing procedures units remaining in Department 2 were 75% completed with respect to conversion costs. for the finished goods inventory.

Required

a. Record the January transactions in general journal form for Department | and Department 2.

b. Prepare a product cost report (with its supporting calculations) for Department 1.

c. Prepare a product cost report (with its supporting calculations) for Department 2.

d. Determine the balances remaining in the Materials Inventory account, in each work in process account, and in the Finished Goods Inventory account.

Transcribed Image Text:

Materials inventory... $30,000 Work in process-Department 1 (3,000 units, 30% complete) Direct materials. 4,560 Conversion costs 10,640 Work in process-Department 2 (4,000 units, 40% complete). Finished goods inventory (2,000 units @ $16). 48,100 32,000