COST ACCOUNTING
PROCESS COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Dr. Work in process-Department 3 Cr. Finished goods inventory
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Dr. Cost of goods manufactured Cr. Work in process-Department 3
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Dr. Work in process-Department 3 Cr. Production
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Dr. Finished goods inventory Cr. Work in process-Department 3
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Detailed explanation-1: -The journal entry to record the transfer of completed units to finished goods is (1) (debit/credit) Finished Goods and (2) (debit/credit) Work in Process. In process costing, manufacturing overhead costs are distributed to each department . Methods to calculate departmental unit costs include .
Detailed explanation-2: -The journal entry to record the transfer of partially completed products from processing Department #1 to processing Department #2 is to debit Work in Process Department.
Detailed explanation-3: -To calculate the goods transferred out, simply take the units transferred out times the sum of the two equivalent unit costs (materials and conversion) because all items transferred to the next department are complete with respect to materials and conversion, so each unit brings all its costs.
Detailed explanation-4: -Equivalent units = number of physical units × percentage of completion. Units completed and transferred out are 100 percent complete. Thus equivalent units are the same as the physical units. Equivalent units = number of physical units × percentage of completion.