Comprehensive Problem Major League Bat Company Major League Bat Company manufactures baseball bats. In addition to its work in process inventories, the company maintains inventories of raw materials and finished goods. It uses raw materials as direct materials in production and as indirect materials. Its factory payroll costs include direct labor for production and indirect labor. All materials are added at the beginning of the process, and conversion costs are applied uniformly throughout the production process. Required: You are to maintain records and produce measures of inventories to reflect the July events of this company. The June 30 balances: Raw Materials Inventory, $31,000; Work in Process Inventory, $7,985 ($3,260 of direct materials and $4,725 of conversion); Finished Goods Inventory, $120,000; Sales, $0; Cost of Goods Sold, $0; Factory Wages Payable, $0; and Factory Overhead, $0. 1. Prepare journal entries to record the following July transactions and events. a. Purchased raw materials for $175,000 cash (the company uses a perpetual inventory system). b. Used raw materials as follows: direct materials, $45,040; and indirect materials, $16,000. c. Recorded factory wages payable costs as follows: direct labor, $217,250; and indirect labor, $31,000. d. Paid factory payroll cost of $248,250 with cash (ignore taxes). e. Incurred additional factory overhead costs of $92,000 paid in cash. f. Applied factory overhead to production at 50% of direct labor costs. 2. Information about the July inventories follows. Use this information with that from part 1 to prepare a process cost summary, assuming the weighted average method is used. (Round "Cost per EUP" to 2 decimal places.) Units Beginning inventory Started Ending inventory Beginning inventory Materials-Percent complete Conversion-Percent complete Ending inventory Materials-Percent complete Conversion-Percent complete 9,000 units 12,000 units 6,000 units 100% 80% 100% 40% 3. Using the results from part 2 and the available information, make computations and prepare journal entries to record the following: g. Total costs transferred to finished goods for July. h. Sale of finished goods costing $295,700 for $685,000 in cash. 4. Post entries from parts 1 and 3 to the following general ledger accounts. 5. Compute the amount of gross profit from the sales in July. (Hint Add any underapplied overhead to, or deduct any overapplied overhead from the cost of goods sold.) Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Information about the July inventories follows. Use this information with that from part 1 to prepare a process cost summary, assuming the weighted-average method is used. (Round "Cost per EUP" to 2 decimal places.) Total costs to account for: Total costs to account for: $ 0 $ 0 Unit reconciliation: Units to account for: Total units to account for Total units accounted for: Total units accounted for Equivalent units of production (EUP)- weighted average method Units % Materials EUP- Materials % Labor EUP Conversion Total units Cost per equivalent unit of production Materials Conversion Costs Costs EUP EUP 0 Cost per EUP Total cost Total costs - Equivalent units of production Cost per equivalent unit of production (rounded to 2 decimals) Total costs accounted for: Cost of units transferred out: EUP Direct materials Conversion Total costs transferred out Costs of ending goods in process EUP Direct materials Conversion Total cost of ending goods in process Total costs accounted for Cost per EUP 0.00 $ 0.00 Total cost $ Oo 69
