Major League Bat Company manufactures baseball bats. In addition to its work in process inventories, the company maintains inventories of raw materials and finished goods. It uses raw materials as direct materials in production and as indirect materials. Its factory payroll costs include direct labor for production and indirect labor. All materials are added at the beginning of the process, and conversion costs are applied uniformly throughout the production process.

Required:

You are to maintain records and produce measures of inventories to reflect the July events of this company. The June 30 balances: Raw Materials Inventory, $25,000; Work in Process Inventory, $8,135 ($2,660 of direct materials and $5,475 of conversion); Finished Goods Inventory, $110,000; Sales, $0; Cost of Goods Sold, $0; Factory Payroll Payable, $0; and Factory Overhead, $0.

1. Prepare journal entries to record the following July transactions and events.

Purchased raw materials for $125,000 cash (the company uses a perpetual inventory system).

Used raw materials as follows: direct materials, $52,440; and indirect materials, $10,000.

Recorded factory payroll payable costs as follows: direct labor, $202,250; and indirect labor, $25,000.

Paid factory payroll cost of $227,250 with cash (ignore taxes).

Incurred additional factory overhead costs of $80,000 paid in cash.

Allocated factory overhead to production at 50% of direct labor costs.

2. Information about the July inventories follows. Use this information with that from part 1 to prepare a process cost summary, assuming the weighted-average method is used. (Round "Cost per EUP" to 2 decimal places.

S. NOParticulars                             Debit  Credit

1        Raw Materials Inventory $ 125,000

                                                  Cash  $ 125,000

Purchased raw materials for $125,000 cash

2  Work In  Process – Direct Materials $ 52,440

     Work In  Process – Indirect Materials $ 10,000

                                                Raw Materials Inventory$ 62,440

Used raw materials as follows: direct materials, $52,440; and indirect materials, $10,000.

3Work In Process ( Direct Labor) $202250

        Factory Overhead (Indirect Labor) $25,000  

                                                     Payroll Account$227,250

Recorded factory payroll payable costs as follows: direct labor, $202,250; and indirect labor, $25,000.

4                  Payroll $227,250

                                                        Cash$227,250  

Paid factory payroll cost of $227,250 with cash (ignore taxes).

5                 Factory Overhead $ 80,000

                                                        Cash$ 80,000  

Incurred additional factory overhead costs of $80,000 paid in cash

6                    Work In Process  $101,125

                                            Factory Overhead $101,125  

Allocated factory overhead to production at 50% of direct labor costs

Process Cost Summary  

Costs Per EUP

                                              Direct MaterialConversion  Costs

Beginning   Inventory                  $25,000  

Work In Process    Beg. Inventory26605475

Costs Added  During the Period         52,440317250**

Total Costs  Incurred in the Period$80,100$322707

Conversion Costs ** Direct Labor+ Factory Overhead  

CC -   $ 202250+ $ 25,000+ $ 10,000+ $ 80,000= $317250

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