Problem:
Baker’s Choice Flour Company manufactures flours by a series of three processes, beginning with wheat grain begin introduced in the Milling Department. From the Milling Department, the materials pass through the sifting and Packaging Department, emerging as packaged refined flour.
The balance in the account Work in Process—Sifting Department was as follows on July 1, 2003:
Work in Process—Sifting Department (25,800 units, 3/4 completed) $38,700
The following costs were charged to Work in Process—Sifting Department during July:
Direct materials transferred from Milling Department: 640,000units
at $1.15 a unit $736,000
Direct labor 148,742
Factory overhead 92,406
Instruction:
1. Prepare a cost of production for the shifting Department for July.
2. Journalize the entries for costs transferred from Milling to sifting and the costs transferred from sifting to Packaging.
3. Discuss the uses of the cost of production report.