8. Johnson Winery in Pleasant Valley, New York, has two departments: Fermenting and Packaging. Direct materials are added at the beginning of the fermenting process (grapes) and at the end of the packaging process (bottles). Data from the month of March for the Fermenting Department are as follows: 1(Click the icon to view the data from March.) Johnson Winery completed the following production cost report for its Fermenting Department for the month of March: 2(Click the icon to view the production cost report.) Conversion costs are added evenly throughout each process. The company uses the weighted-average method. Read the requirements Requirement 1. Prepare the journal entries to record the assignment of direct materials and direct labor and the allocation of manufacturing overhead to the Fermenting Department. Assume labor costs are accrued and not yet paid. Also prepare the journal entry to record the cost of the gallons completed and transferred out to the Packaging Department. (Record debits first, then credits. Exclude explanations from any journal entries.) Begin with the journal entry to record the assignment of direct materials to the Fermenting Department. Do not record the assignment of direct labor or the allocation of manufacturing overhead with this entry. We will prepare those entries separately in the following steps. Date Mar. 31 (1) (2) Accounts Debit Credit (3) (4) Prepare the journal entry to record the assignment of direct labor to the Fermenting Department. Assume labor costs are accrued and not yet paid. Date Mar. 31. (5) (6) (7) (8) Accounts Debit Credit Prepare the journal entry for the allocation of manufacturing overhead to the Fermenting Department. Date Mar. 31 (9) (10) (11) (12) Accounts Debit Credit Also prepare the journal entry to record the cost of the gallons completed and transferred out to the Packaging Department. Date Accounts Debit Credit Mar. 31 (13) (14) (15) (16) Requirement 2. Post the journal entries to the Work-in-Process Inventory-Fermenting T-account. What is the ending balance? Post the entries using the appropriate descriptions as posting references. Denote the ending balance as "Bal." Work-in-Process Inventory-Fermenting Beg. Bal. (18) (20) (22) (24) 1,820 (17) (19) (21) (23) (25) Requirement 3. What is the average cost per gallon transferred out of the Fermenting Department into the Packaging Department? Why would Johnson Winery's managers want to know this cost? (Round your answer to the nearest cent.) The average cost per gallon transferred out of Fermenting is Why would Johnson Winery's managers want to know this cost? per gallon. A. Managers would compare the average cost per gallon against their budgeted costs to determine whether the costs of the blending process remain under control. If budgeted costs are higher than the actual average cost per gallon, then the managers have done a good job controlling costs. In contrast, if the budgeted costs are lower than the actual average cost per gallon, managers will investigate the reason for the higher-than-expected costs in an effort to regain control over costs. B. Managers use the cost per gallon for external financial reporting-specifically to calculate the Cost of Goods Sold on the Income Statement. C. Managers use the cost per gallon for external financial reporting-specifically to calculate the ending inventory balances on the Balance Sheet. D. All of the above are reasons why management would be interested in this cost per unit for gallons completed and transferred out to Finished Goods Inventory. 1: Data Table 2: Reference COSTS Gallons Beginning Work-in-Process Inventory 100 gallons Started in production 9,900 gallons Completed and transferred out to Packaging in March 6,800 gallons Ending Work-in-Process Inventory (80% of the way 3,200 gallons through the fermenting process) Costs Beginning Work-in-Process Inventory: Direct materials 1,460 Direct labor 200 Manufacturing overhead allocated 160 Costs added during March: Direct materials Direct labor Manufacturing overhead allocated Total costs added during March Johnson Winery Production Cost Report - Fermenting Department (Partial) 9,440 3,564 4,500 17,504 Month Ended March 31 Direct Materials Conversion Costs Total Costs Costs to account for: Beginning work-in-process $ 1,460 $ 360 $ 1,820 Costs added during the period 9,440 8,064 17,504 Total costs to account for 10,900 $ 8,424 $ 19,324 Divided by: Total equivalent units of production 10,000. 9,360 $ 1.09 $ 0.90 Cost per equivalent unit Costs accounted for: Completed and transferred out Ending work-in-process 7,412 $ 6,120 $ 13,532 3,488 2,304 5,792 $ 10,900 $ 8,424 $ 19,324 Total costs accounted for 3: Requirements Gallons Beginning Work-in-Process Inventory 100 gallons Started in production 9,900 gallons Completed and transferred out to Packaging in March 6,800 gallons Ending Work-in-Process Inventory (80% of the way 3,200 gallons through the fermenting process) Costs Beginning Work-in-Process Inventory: Direct materials Direct labor Manufacturing overhead allocated Costs added during March: Direct materials Direct labor Manufacturing overhead allocated Total costs added during March 1,460 200 160 9,440 3,564 4,500 $ 17,504 COSTS Johnson Winery Production Cost Report - Fermenting Department (Partial) Month Ended March 31 Direct Conversion Total Materials Costs Costs Costs to account for: Beginning work-in-process 1,460 $ 360 $ 1,820 Costs added during the period 9,440 8,064 17,504 Total costs to account for $ 10,900 $ 8,424 $ 19,324 Divided by: Total equivalent units of production 10,000 9,360 Cost per equivalent unit 1.09 $ 0.90 Costs accounted for. Completed and transferred out $ 7,412 $ 6,120 $ 13,532 Ending work-in-process 3,488 2,304 5,792 Total costs accounted for $ 10,900 $ 8,424 $ 19,324 1. Prepare the journal entries to record the assignment of direct materials and direct labor and the allocation of manufacturing overhead to the Fermenting Department. Assume labor costs are accrued and not yet paid. Also prepare the journal entry to record the cost of the gallons completed and transferred out to the Packaging Department. 2. Post the journal entries to the Work-in-Process Inventory-Fermenting T-account. What is the ending balance? 3. What is the average cost per gallon transferred out of the Fermenting Department into the Packaging Department? Why would Johnson Winery's managers want to know this cost