Question

Comprehensive Problem Major League Bat Company

Major League Bat Company manufactures baseball bats. In addition to its work in process inventories, the company maintains inventories of raw materials and finished goods. It uses raw materials as direct materials in production and as indirect materials. Its factory payroll costs include direct labor for production and indirect labor. All materials are added at the beginning of the process, and conversion costs are applied uniformly throughout the production process.

Required:
2. Information about the July inventories follows. Use this information with that from part 1 to prepare a process cost summary, assuming the weighted average method is used. (Round "Cost per EUP" to 2 decimal places.) 9,500 units 13,000 units 7,000 units Units Beginning inventory Started Ending inventory Beginning inventory Materials-Percent complete Conversion-Percent complete Ending inventory Materials-Percent complete Conversion-Percent complete 100% 70% 100% 30% 3. Using the results from part 2 and the available information, make computations and prepare journal entries to record the following: g. Total costs transferred to finished goods for July. h. Sale of finished goods costing $298,200 for $690,000 in cash. 4. Post entries from parts 1 and 3 to the following general ledger accounts. 5. Compute the amount of gross profit from the sales in July. (Hint Add any underapplied overhead to, or deduct any overapplied overhead from, the cost of goods sold.) Complete this question by entering your answers in the tabs below.

You are to maintain records and produce measures of inventories to reflect the July events of this company. The June 30 balances: Raw Materials Inventory, $32,000; Work in Process Inventory, $8,200 ($3,310 of direct materials and $4,890 of conversion); Finished Goods Inventory, $130,000; Sales, $0; Cost of Goods Sold, $0; Factory Wages Payable, $0; and Factory Overhead, $0.

1. Prepare journal entries to record the following July transactions and events.

1. Purchased raw materials for $180,000 cash (the company uses a perpetual inventory system).
2. Used raw materials as follows: direct materials, $50,690; and indirect materials, $16,500.
3. Recorded factory wages payable costs as follows: direct labor, $218,500; and indirect labor, $31,500.
4. Paid factory payroll cost of $250,000 with cash (ignore taxes).
5. Incurred additional factory overhead costs of $93,000 paid in cash.
6. Applied factory overhead to production at 50% of direct labor costs.

2. Information about the July inventories follows. Use this information with that from part 1 to prepare a process cost summary, assuming the weighted-average method is used. (Round "Cost per EUP" to 2 decimal places.)

Answer 1

1.

	Account Titles	Debit	Credit
a	Raw materials inventory	$       180,000
	Cash		$       180,000
b	Work in process inventory	$         50,690
	Manufacturing Overhead	$         16,500
	Raw materials inventory		$         67,190
c	Work in process inventory	$       218,500
	Manufacturing Overhead	$         31,500
	Wages Payable		$       250,000
d	Wages Payable	$       250,000
	Cash		$       250,000
e	Manufacturing overhead	$         93,000
	Cash		$         93,000
f	Work in process inventory	$       109,250		=218500*50%
	Manufacturing overhead		$       109,250

2.

		Material	Conversion
Units to account for
Beginning Work in process	9500
Units started	13000
Total Units to account for	22500
Units accounted for
Units transferred	15500	15500	15500
Equivalent units in ending WIP	7000	7000	2100
Total units accounted for	22500
Equivalent units of production		22500	17600
	Material	Conversion
Cost of beginning work in process	$            3,310	$            4,890
Cost added during the production	$         50,690	$       327,750
Total Cost	$         54,000	$       332,640
Equivalent units of production	22500	17600
Cost per Equivalent unit	$              2.40	$            18.90
	Material	Conversion	Total
Ending Work in process inventory
Equivalent units	7000	2100
Cost per Equivalent unit	$              2.40	$            18.90
Cost of Ending Work in process inventory	$         16,800	$         39,690	$       56,490
Units completed and transferred out
Units transferred	15500	15500
Cost per Equivalent unit	$              2.40	$            18.90
Cost of Units transferred	$         37,200	$       292,950	$     330,150
Costs to be accounted for
Cost of beginning work in process	$            8,200
Cost added during production	$       378,440
Total Costs to be accounted for	$       386,640
Costs accounted for as follows
Cost of Ending work in process	$         56,490
Cost of Units transferred	$       330,150
Total Costs accounted for	$       386,640