Problem:
Work in Process Inventory Accounts in Process Costing Systems
Gilbert, Inc., which uses a process costing system, makes a chemical used as a food preservative. The manufacturing process involves Departments A and B. The company had the following total costs and unit costs for completed production last month, when it manufactured 10,000 pounds of the chemical. Neither Department A nor Department B had any beginning or ending work in process inventories.
|
Total Cost
|
Unit Cost
|
|
Department A
|
|
|
|
Direct materials
|
$10,000
|
$1.00
|
|
Direct labor
|
2,600
|
0.26
|
|
Overhead
|
1,300
|
0.13
|
|
Total costs
|
$13,900
|
$1.39
|
|
Department B
|
|
|
|
Direct materials
|
$ 3,000
|
$0.30
|
|
Direct labor
|
700
|
0.07
|
|
Overhead
|
1,000
|
0.10
|
|
Total costs
|
$ 4,700
|
$0.47
|
|
Totals
|
$18,600
|
$1.86
|
1. How many Work in Process Inventory accounts would Gilbert use?
2. What dollar amount of the chemical's production cost was transferred from Department A to Department B last month?
3. What dollar amount was transferred from Department B to the Finished Goods Inventory account?
4. What dollar amount is useful in determining a selling price for 1 pound of the chemical?