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 Work in Process-Department 2 585,000
585,000
B) Work in Process-Department 3 Work in Process-Department 2 570,000
570,000
C) Work in Process-Department 3 Work in Process-Department 2 555,000
555,000
D) Work in Process-Department 3 Work in Process-Department 2 165,000
165,000

Question

Quizplus · Accepted Answer

The correct answer is A because the journal entry to record the flow of costs into Department 3 during the period is to debit Work in Process-Department 3 for $585,000 and credit Work in Process-Department 2 for $585,000. This is because the total cost of production for Department 2 is $585,000, which includes direct materials, direct labor, and applied factory overhead.

Mocha Company Manufactures a Single Product by a Continuous Process