Cost Flows

Lamont Company produced 80,000 machine parts for diesel engines. There were no beginning or ending work-in-process inventories in any department. Lamont incurred the following costs for May:

		Molding Department		Grinding Department		Finishing Department
Direct materials		$13,000		$5,200		$8,000
Direct labor		10,000		8,800		12,000
Applied overhead		17,000		14,000		11,000

Required:

1. Calculate the costs transferred out of each department.

	Costs Transferred Out
Molding	$___________
Grinding	$___________
Finishing	$___________

2. Prepare the journal entries corresponding to these transfers. Also, prepare the journal entry for Grinding that reflects the costs added to the transferred-in goods received from Molding. For a compound transaction, if an amount box does not require an entry, leave it blank.

Transfer entries:	Work in Process-Grinding
	Work in Process-Molding
	Work in Process-Finishing
	Work in Process-Grinding
	Finished Goods
	Work in Process-Finishing
Cost-added entry (Grinding only):	Work in Process-Grinding
	Materials
	Payroll
	Overhead Control

3. What if the Grinding Department had an ending WIP of $12,000? Calculate the cost transferred out. $_____________

Provide the journal entry that would reflect this transfer.

	Work in Process-Finishing
	Work in Process-Grinding

What is the effect on finished goods calculated in Requirement 1, assuming the other two departments have no ending WIP? Decreased by $___________