Question

Following is a partial process cost summary for Mitchell Manufacturing's Canning Department.

Equivalent Units of Production	Direct Materials					Conversion
Units Completed and transferred out			52,000					52,000
Units in Ending Work in Process:
Direct Materials (12,000 × 100%)			12,000
Conversion (12,000 × 80%)								9,600
Equivalent Units of Production			64,000					61,600
Cost per Equivalent Unit
Costs of beginning work in process		$	40,700				$	60,000
Costs incurred this period			136,700					184,000
Total costs		$	177,400				$	244,000
Cost per equivalent unit		$	2.77	per EUP			$	3.96	per EUP

If the units completed were transferred to the Labeling Department, what is the appropriate journal entry to transfer the conversion costs?

Multiple Choice

• Work in Process—Labeling $184,000; Work in Process—Canning $184,000.

• Work in Process—Labeling $205,920; Work in Process—Canning $205,920.

• Finished Goods—Labeling $184,000; Finished Goods—Canning $184,000.

• Work in Process—Labeling $205,920; Finished Goods—Canning $205,920.

• Finished Goods $244,000; Work in Process $244,000.

Answer 1

Correct answer------------Work in Process—Labeling $205,920; Work in Process—Canning $205,920

.

The WIP of department in which transfer is made will be debited and transferring department WIP will be credited.

Statement of cost (Partial)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Conversion	$ 3.96	9,600	$          38,025.97	52,000	$        205,974.03