Reference no: EM13606915

Work in Process Inventory Accounts in Process Costing Systems

E 3. Gilbert, Inc., which uses a process costing system, makes a chemical used as a food preservative. The manufacturing process involves Departments A and B. The company had the following total costs and unit costs for completed production last month, when it manufactured 10,000 pounds of the chemical. Neither Department A nor Department B had any beginning or ending work in process

inventories.
                                              Total Cost              Unit Cost
Department A
Direct materials                         $10,000                 $1.00
Direct labor                               2,600                    0.26
Overhead                                  1.300                    0.13
Total costs                                $13,900                 $1.39

Department B
Direct materials                           $ 3,000                $0.30
Direct labor                                 700                      0.07
Overhead                                    1,000                   0.10
Total costs                                  $ 4,700                $0.47
Totals                                          $18,600               $1.86

1. How many Work in Process Inventory accounts would Gilbert use?

2. What dollar amount of the chemical's production cost was transferred from Department A to Department B last month?

3. What dollar amount was transferred from Department B to the Finished Goods Inventory account?

4. What dollar amount is useful in determining a selling price for 1 pound of the chemical?