Process costing serves two related purposes. First, it measures the cost of goods manufactured on both a total and per-unit basis. This information is used in valuing inventories and in recording the cost of goods sold. But process costing also provides management with information about the per-unit cost of performing each step in the production process. This information is useful in evaluating the efficiency of production departments and often draws attention to potential cost savings.

Milton Manufacturing uses a process costing system. Products are processed successively by Department and Department Y and are then transferred to the finished goods warehouse. Shown below is cost information for Department Y during the month of May:

Process costing system-journal entries

Recreate the following table and prepare a general journal entry summarizing each of the following transaction categories for the month of May (you may omit explanations):

The transfer of production from Department to Department Y. (b.) The recording of manufacturing costs incurred in Department Y during May. (Use a single journal entry.) (c.) The transfer of completed units from Department Y to the finished goods warehouse.

Cost of work in process at May 1 Cost of units transferred in from Department X 85,000 during May 262,000 Manufacturing costs added in DepartmentY Direct materials used Direct labor Manufacturing overhead $210,000 45,000 07,000_322,000 Total costs charged to Department Y as of May 31 669 000