Cost of Production and Journal Entries AccuBlade Castings Inc. casts blades for turbine engines. Within the Casting Department, alloy is first melted in a crucible, then poured into molds to produce the castings. On May 1, there were 900 pounds of alloy in process, which were 70% complete as to conversion. The Work in Process balance for these 900 pounds was $120,780, determined as follows:

Direct materials (900 x $130) $117,000

Conversion (900 x 70% x $6) 3,780

$120,780

During May, the Casting Department was charged $1,071,000 for 8,500 pounds of alloy and $16,910 for direct labor. Factory overhead is applied to the department at a rate of 150% of direct labor. The department transferred out 8,700 pounds of finished castings to the Machining Department. The May 31 inventory in process was 55% complete as to conversion.

a1. Prepare the May journal entry for the Casting Department for the materials charged to production.

Work in Process-Casting

Department Materials-Alloy

a1. Remember there are three different areas of inventory; materials, work in process, and finished goods.

a2. Prepare the May journal entry for the Casting Department for the conversion costs charged to production. If an amount box does not require an entry, leave it blank.

Work in Process-Casting Department Wages Payable

Factory Overhead-Casting Department

a2. Remember that a work in process account accumulates all costs (direct materials, direct labor, manufacturing overhead) that are added to the units in a given department. What types of costs are considered conversion costs?

a3. Prepare the May journal entry for the Casting Department for the completed production transferred to the Machining Department.

Work in Process-Machining Department

Work in Process-Casting Department

a3. Are these goods ready for finished goods inventory or do these units need to be transferred to another department first?

b. Determine the Work in ProcessCasting Department May 31 balance. $

c. Compute the change in the costs per equivalent unit for direct materials and conversion from the previous month (April). Cost per Equivalent Unit

Change in materials Decrease $

Change in conversion Decrease

b. How many units are still in process at the end of the period?

c. Compare the materials and conversion costs per equivalent unit for April and May. The April costs per equivalent unit are determined from the May 1 work in process inventory.