Question

Radford Inc. manufactures a sugar product by a continuous process, involving three production departments—Refining, Sifting, and Packing. Assume that records indicate that direct materials, direct labor, and applied factory overhead for the first department, Refining, were $386,100, $135,100, and $88,800, respectively. Also, work in process in the Refining Department at the beginning of the period totaled $21,600, and work in process at the end of the period totaled $26,600.

a. Journalize the entries to record the flow of costs into the Refining Department during the period for (1) direct materials, (2) direct labor, and (3) factory overhead. .
b. Journalize the entry to record the transfer of production costs to the second department, Sifting.

Answer 1

a. S/n Account Titles Debit Credit

1 Work in progress - Refining Department $386,100

Material $386,100

2 Work in progress - Refining Department $135,100

Wages Payable $135,100

3 Work in progress - Refining Department $88,800

Factory Overhead-Refining Department $88,800

b. Cost of Transfer = Opening WIP cost + Material + wages + Factory Overhead - Closing WIP Cost

Cost of Transfer = 21,600 + 386,100 + 135,100 + 88,800 - 26,600

Cost of Transfer = $605,000

Date Account Titles Debit Credit

Work in progress - Shifting Department $605,000

Work in progress - Refining Department $605,000