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		$5,400		$8,000
Direct labor		10,000		8,500		12,000
Applied overhead		17,000		14,000		12,000

Required:

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1. Calculate the costs transferred out of each department.

	Costs Transferred Out
Molding	$fill in the blank 1
Grinding	$fill in the blank 2
Finishing	$fill in the blank 3

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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:
	MaterialsOverhead ControlPayrollWork in Process-GrindingWork in Process-Molding	blank
	Accounts PayableCashOverhead ControlPayrollWork in Process-Molding		blank
	MaterialsOverhead ControlPayrollWork in Process-FinishingWork in Process-Molding	blank
	Accounts PayableCashOverhead ControlPayrollWork in Process-Grinding		blank
	Accounts PayableFinished GoodsMaterialsOverhead ControlWork in Process-Molding	blank
	Accounts PayableFinished GoodsMaterialsOverhead ControlWork in Process-Finishing		blank
Cost-added entry (Grinding only):
	Overhead ControlPayrollWork in Process-FinishingWork in Process-GrindingWork in Process-Molding	blank	blank
	Accounts PayableMaterialsWork in Process-FinishingWork in Process-GrindingWork in Process-Molding	blank	blank
	Accounts PayablePayrollWork in Process-FinishingWork in Process-GrindingWork in Process-Molding	blank	blank
	Accounts PayableCashFinished GoodsOverhead ControlWork in Process-Finishing	blank	blank

3. What if the Grinding Department had an ending WIP of $12,000? Calculate the cost transferred out. $fill in the blank 1_____

Provide the journal entry that would reflect this transfer.

Accounts PayableCashOverhead ControlWork in Process-FinishingWork in Process-Grinding	blank
Accounts PayableCashOverhead ControlWork in Process-FinishingWork in Process-Grinding		blank

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

Increased or decreased? by $fill in the blank____