Chapter 16: Serial Problem

Here's a step-by-step guide to solve the problems from the Business Solutions P1 and Comprehensive Problem sections you've provided. This will cover the computation of equivalent units, cost per unit, journal entries, and gross profit calculations for the Major League Bat Company scenario. SP 16: Santana's Computer Workstation Furniture Business 1. Compute Equivalent Units of Production (EUP): o Direct Materials: Since all materials are added at the beginning of the process, the EUP for direct materials equals the total number of desks produced. o Conversion Costs: Calculate EUP for conversion based on the percentage of completion of the units that are finished and the units that are still in process. 2. Compute Cost per Equivalent Unit: o Direct Materials Cost per EUP: Total direct materials costs divided by EUP for direct materials. o Conversion Cost per EUP: Total conversion costs divided by EUP for conversion. 3. Assign Costs: o Units Transferred to Finishing: Calculate the total costs assigned to the units that are completed and transferred to the Finishing department. o Ending Work in Process Inventory: Calculate the costs associated with the units that remain in the Cutting department. CP 16: Major League Bat Company 1. Set Up General Ledger Accounts: o Raw Materials Inventory: $25,000 o Work in Process Inventory: $8,135 (Direct Materials: $2,660, Conversion: $5,475) o Finished Goods Inventory: $110,000 o Sales: $0 o Cost of Goods Sold: $0 o Factory Wages Payable: $0 o Factory Overhead: $0 2. Journal Entries for July Transactions: o Purchased Raw Materials:  Debit Raw Materials Inventory: $125,000  Credit Cash: $125,000 o Used Raw Materials: Debit Work in Process Inventory (Direct Materials): $52,440  Debit Factory Overhead (Indirect Materials): $10,000  Credit Raw Materials Inventory: $62,440 o Recorded Factory Wages Payable:  Debit Work in Process Inventory (Direct Labor): $202,250  Debit Factory Overhead (Indirect Labor): $25,000  Credit Factory Wages Payable: $227,250 o Incurred Other Actual Factory Overhead Costs:  Debit Factory Overhead: $66,125  Credit Cash: $66,125 o Applied Factory Overhead:  Applied Overhead = 50% of Direct Labor: $202,250 × 50% = $101,125  Debit Work in Process Inventory: $101,125  Credit Factory Overhead: $101,125 Prepare Production Cost Report: o Use the weighted average method to calculate equivalent units, cost per equivalent unit, and assign costs based on the provided information about the WIP inventory for July. Total Costs Transferred to Finished Goods: o This should be the total production costs assigned to the units that have been completed and moved to Finished Goods Inventory for July. Sale of Finished Goods: o For the sale of finished goods:  Debit Cash: $625,000  Credit Sales: $625,000  To record the cost of goods sold, use the cost of the finished goods sold:  Debit Cost of Goods Sold: $265,700  Credit Finished Goods Inventory: $265,700 Compute Gross Profit: o Gross Profit = Sales - Cost of Goods Sold o Gross Profit = $625,000 - $265,700 = $359,300  3. 4. 5. 6. Summary of Journal Entries Here’s how the journal entries would look in summary format: plaintext Копировать код 1. Purchase of Raw Materials Raw Materials Inventory 125,000 Cash 2. Use of Raw Materials Work in Process Inventory Factory Overhead Raw Materials Inventory 3. Direct Labor Costs Work in Process Inventory Factory Overhead Factory Wages Payable 4. Other Factory Overhead Costs Factory Overhead Cash 5. Applied Factory Overhead Work in Process Inventory Factory Overhead 125,000 52,440 10,000 202,250 25,000 66,125 101,125 6. Sale of Finished Goods Cash Sales 7. Cost of Goods Sold Cost of Goods Sold Finished Goods Inventory 62,440 227,250 66,125 101,125 625,000 625,000 265,700 265,700 Final Calculation • Gross Profit: $359,300 This breakdown should help you understand how to approach these problems comprehensively. If you have any specific data or values for the computations that you’d like to work through, please provide them!