The Launceston Wool Company designs and manufactures woollen coats, which are in high demand the cold Tasmanian winters. The company uses a process costing system to cost products because 1: produces only two basic styles through two production departments-the Cutting and Sewing Departments. It is company policy to complete all units of product by month-end. During August, on style of coat was manufactured-the Woolly Warmer. The following data relate to that month:

Required:
1. Determine the unit cost per coat in August. There were 7500 units produced in August.
2. Prepare the journal entries to record the production costs For August. Assume that the costs of the two production departments are charged to separate work in process inventory accounts.
3. Given the company policy of no work in process inventory at month-end, why would the company include departmental work in process accounts in its general ledger?

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31 August $37 500 1 August Raw material S60 000 Work in process Finished goods 15 000 7 500 Production data Direct material Direct labour Direct labour hours (DLH) Machine hours (MH) Budgeted overhead Budgeted cost driver Cutting Department $90 000 $37 500 Sewing Department $ 7 500 $90 000 3 600 1875 1350 600 $45 000 $24 000 15 000 MH 3 000 DLH