Zebat Manufacturing began a new product line this year. Management wants a cost report for the current year and a budget for next year. The product requires processing in two departments, Materials are added at the beginning of the process in Department 1. Department 2 finishes the product but adds no direct materials.

During the year work was begun on 12,000 units in Department 1, and 9,000 of those units were transferred to Department 2. The remaining 3,000 units were 60% complete with regard to conversion costs in Department 1. During the year Department 1 incurred $36,000 in material costs, $9,060 in direct labor, and $4,980 in manufacturing overhead costs.

Department 2 completed and sent 7,000 units to the finished goods warehouse. It ended the period with 2,000 units 40% complete with regards to Department's 2 conversion costs. Department 2 incurred $19,450 in direct labor and $13,310 in manufacturing overhead costs for the year.

The plan for next year is to begin an additional 15,000 units in Department 1. Management expects to finish the year with 5,000 units onehalf complete in regards to conversions costs in Department 1. Department 2 is expected to complete 14,000 units, and its ending inventory is expected to be 70% complete. Costs for Department 1 are expended to be: materials $48,000; direct labor $10,075 and manufacturing overhead $4,470. Costs for Department 2 are expected to be $22,355 for direct labor and $36,075 for manufacturing overhead.

Management has asked you to prepare cost reports for the current year using the weighted average process costing method and a budgeted cost report for the next year, also using the weightedaverage process costing method.

After completing the above, prepare the journal entries in a separate worksheet. Use the following account descriptions for your journal entries: Raw Materials Department 1 WIP Department 2 WIP Finished Goods Wages Payable Manufacturing Overhead Make sure to clearly separate the journal entries for each year.