31 Prepare newspaper Entries for a process Costing System

Calculating the costs linked with the miscellaneous processes within a process costing system is just a part of the audit process. Journal entries are supplied to record and also report the financial details relating come the transactions. The instance that complies with illustrates exactly how the newspaper entries reflect the process costing device by recording the circulation of goods and also costs v the procedure costing environment.

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Purchased products for multiple Departments

Each department within rock City Percussion has a separate job-related in procedure inventory account. Raw materials totaling \$33,500 were ordered prior to being requisitioned by every department: \$25,000 because that the shaping department and \$8,500 because that the packaging department. The July 1 newspaper entry to record the to buy on account is:

During July, the packaging room requisitioned \$2,000 in straight material and also overhead prices for indirect product totaled \$300 because that the month the July. The newspaper entry to record the requisition and also usage of products is:

During July, the packaging department incurred \$13,000 of straight labor costs and indirect labor of \$1,000. The newspaper entry to document the labor costs is:

Rock City Percussion determined that maker hours is the proper base come use once allocating overhead. The estimated annual overhead cost is \$340,000 per year. The was also estimated the the total an equipment hours will be 34,000 hours, therefore the allocation rate is computed as:

The finishing department provided 910 device hours, and with one overhead application rate of \$10 per straight labor hour, the journal entry to document the overhead allocation is:

Transferred products from the Packaging department to finished Goods

The computation the inventory because that the packaging department is shown in (Figure).

Recording the price of goods Sold out of the Finished items Inventory

Each unit is a package of 2 drumsticks that expense \$8.40 to make and sells for \$24.99. There space two transactions once recording a sale. One entry is to transport the inventory from finished products inventory to price of items sold and is at the cost of the product. The 2nd transaction is to record the sale at the sales price. The link entry to record both transactions for the sale of 500 devices on account is:

The prominence of properly recording the production procedure is depicted in this report on work-related in process inventory indigenous InventoryOps.com.

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Key Concepts and Summary

Traditional journal entries display the purchase of material and also the occurs of overhead costs.Each department records the transfer of product from the storeroom right into production, its straight labor costs, the application of overhead, and also the move of items to the next department or perfect goods.The value of the inventory moved to the following department or to perfect goods amounts to the amount provided as moved on the production price report.