Lily Flour Company manufactures flour by a series of three
processes, beginning with wheat being introduced in the Milling
Department. From the Milling Department, the materials pass through
the Sifting and Packaging departments, emerging as a packaged
refined flour.
The balance in the account Work in Process--Sifting
Department was as follows on July 1, 2014:
Work in Process--Sifting Department (700 units, 3/5
completed):
Direct Materials (700x$2.58) $1806
Conversion (700x$0.55) 231
equals $2037
The following costs were charged to Work in Process--Sifting
Department during July:
Direct materials transferred from Milling Department:
12,300 units at $2.60 a unit $31980
Direct Labor 4670
Factory Overhead 2758
During July, 12,000 units of flour were completed. Work in
Process--Sifting Department on July 31 was 1,000 units, 4/5
completed.
1. Prepare a cost of production report for the sifting
department for July
2. Journalize the entries for costs transferred from Milling
to Sifting and the costs transferred from Sifting to Packaging.
3. Determine the increase or decrease in the cost per
equivalent unit from June to July for direct materials and
conversion costs.
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