Following is a partial process cost summary for Mitchell Manufacturing's Canning Department.
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If the units completed were transferred to the Labeling Department, what is the appropriate journal entry to transfer the direct materials?
A) Work in Process-Labeling $135,500; Work in Process-Canning $135,500.
B) Finished Goods $136,000; Work in Process $136,000.
C) Work in Process-Labeling $176,500; Finished Goods-Canning $176,500.
D) Finished Goods-Labeling $135,500; Finished Goods-Canning $135,500.
E) Work in Process-Labeling $176,500; Work in Process-Canning $176,500.

Question

Following is a partial process cost summary for Mitchell Manufacturing's Canning Department. 
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If the units completed were transferred to the Labeling Department, what is the appropriate journal entry to transfer the direct materials?
A) Work in Process-Labeling $135,500; Work in Process-Canning $135,500. 
B) Finished Goods $136,000; Work in Process $136,000. 
C) Work in Process-Labeling $176,500; Finished Goods-Canning $176,500. 
D) Finished Goods-Labeling $135,500; Finished Goods-Canning $135,500. 
E) Work in Process-Labeling $176,500; Work in Process-Canning $176,500.

Quizplus · Accepted Answer

The direct materials for the completed units are included in the total costs for the Canning Department, which is $1176.50. To transfer these costs to the Labeling Department, a journal entry should be made debiting Work in Process-Labeling for $135,500 (which is the number of units completed multiplied by the cost per equivalent unit for direct materials, which is $2.71), and crediting Work in Process-Canning for the same amount ($135,500). Therefore, choice A is the correct answer. Choice B is incorrect because it transfers the completed units to Finished Goods instead of the Labeling Department. Choice C is incorrect because it transfers costs from the Canning Department to Finished Goods rather than the Labeling Department. Choice D is incorrect because it transfers costs from Finished Goods in the Canning Department, rather than Work in Process. Choice E is incorrect because it transfers costs from Work in Process in both the Labeling and Canning Departments, but does not specify the amount to be transferred.

Following Is a Partial Process Cost Summary for Mitchell Manufacturing's