AccuBlade Castings Inc. casts blades for turbine engines. Within the Casting Department, alloy is first melted in a crucible, then poured into molds to produce the castings. On May 1, there were 230 pounds of alloy in process, which were 60% complete as to conversion. The Work in Process balance for these 230 pounds was $32,844, determined as follows: Direct materials (230 x $132)$30,360
Conversion (230 x 60% x $18)2,484 $32,844
During May, the Casting Department was charged $350,000 for 2,500 pounds of alloy and $19,840 for direct labor. Factory overhead is applied to the department at a rate of 150% of direct labor. The department transferred out 2,530 pounds of finished castings to the Machining Department. The May 31 inventory in process was 44% complete as to conversion.
a. Prepare the following May journal entries for the Casting Department:
1. The materials charged to production
2. The conversion costs charged to production
3. The completed production transferred to the Machining Department
b. Determine the Work in Process—Casting Department May 31 balance.
c. Compute and evaluate the change in the costs per equivalent unit for direct materials and conversion from the previous month (April).

AccuBlade Castings Inc.

Casting Department

a. Journal Entries for:

1. The materials charged to production:

Debit WIP $350,000

Credit Raw materials $350,000

To record the cost of materials charged to production.

2. The conversion costs charged to production:

Debit WIP $49,600

Credit Direct Labor $19,840

Credit Manufacturing overhead $29,760

3. Debit Machining Department $402,827

Credit WIP $402,827

To record the transfer of completed units to the machining department.

b. Work-in-Process - Casting Department balance = $29,616

c. The change in the costs per equivalent unit for direct materials and conversion from April:

                                                 Direct Materials              Conversion

April cost per equivalent unit        $132.00                    $18.00

May cost per equivalent unit         $139.33                    $19.89

Change in cost per equivalent unit  $7.33 increase       $1.89 increase

The cost per equivalent unit increased in both direct materials and conversion for May when compared to April's.

Explanation:

a) Data and Calculations:

                         Units

Beginning WIP    230

Started             2,500

Transferred     2,530

Ending WIP        200

Equivalent units of production:

                         Units  Direct Materials  Conversion

Transferred  2,530       2,530 (100%)    2,530 (100%)

Ending WIP     200           200 (100%)         88 (44%)

Total equivalent unit    2,730                 2,618  

Cost of production:

                       Direct Materials             Conversion               Total

Beginning WIP$30,360 (230*$132)   $2,484 (230*60%*$18)  $32,844

Started           350,000 (2,500*$140) 49,600 (2,500*$19.44) 399,600

Total costs    $380,360                    $52,084                         $432,444

Cost per equivalent unit:

                                   Direct Materials      Conversion

Total costs                        $380,360            $52,084

Equivalent units                   2,730                 2,618

Cost per equivalent unit   $139.33              $19.89

Allocation of production costs:

                                       Direct Materials                Conversion              Total

Units transferred out  $352,505(2,530*$139.33) $50,322 (2,530*$19.89) $402,827

Ending WIp                      27,866(200*$139.33)        $1,750 (88*$19.89) $29,616

Total costs                  $380,371                             $52,072                    $432,443

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