Mocha Company manufactures a single product by a continuous process,involving three production departments.The records indicate that direct materials,direct labor,and applied factory overhead for Department 1 were $100,000,$125,000,and $150,000,respectively.Work in process at the beginning of the period for Department 1 was $75,000,and work in process at the end of the period totaled $60,000.The records indicate that direct materials,direct labor,and applied factory overhead for Department 2 were $50,000,$60,000,and $70,000,respectively.In addition,work in process at the beginning of the period for Department 2 totaled $75,000,and work in process at the end of the period totaled $60,000.The journal entry to record the flow of costs into Department 3 during the period is
A) Work in Process-Department 3 585,000
Work in Process-Department 2 585,000
B) Work in Process-Department 3 570,000
Work in Process-Department 2 570,000
C) Work in Process-Department 3 555,000
Work in Process-Department 2 555,000
D) Work in Process-Department 3 165,000
Work in Process-Department 2 165,000

Question

Quizplus · Accepted Answer

To calculate the flow of costs into Department 3, we need to sum up all the costs from Department 2, including direct materials, direct labor, applied factory overhead, and adjust for the change in work in process inventory. For Department 2, the total costs are $50,000 (direct materials) + $60,000 (direct labor) + $70,000 (factory overhead) = $180,000. The work in process at the beginning of the period was $75,000, and at the end of the period, it was $60,000, indicating a decrease of $15,000. Therefore, the total costs to be transferred to Department 3 are $180,000 + $75,000 (beginning WIP) - $60,000 (ending WIP) = $195,000. However, the provided options do not match this calculation, suggesting a need to include Department 1's costs as well, which are $100,000 (direct materials) + $125,000 (direct labor) + $150,000 (factory overhead) = $375,000, with an adjustment for its WIP inventory ($75,000 beginning - $60,000 ending = $15,000 increase), making its total costs $390,000. Adding Department 1's and Department 2's adjusted costs gives $390,000 (Department 1) + $195,000 (Department 2) = $585,000, which matches option A.

Mocha Company Manufactures a Single Product by a Continuous Process,involving