1. Calculate the costs transferred out of each department — Gardner Company produces 18-ounce boxes wheat cereal three departments mixing cooking and

Gardner Company produces 18-ounce boxes of a wheat cereal in three departments: mixing, cooking, and packaging. During August, Gardner produced 250,000 boxes with the following costs:

Mixing Cooking Packaging

Department Department Department

Direct materials…………$825,000………….$379,500……………….$330,000

Direct labor………………120,000…………….75,000…………………180,000

Applied overhead………..225,000…………….82,500…………………332,500

Required:

1. Calculate the costs transferred out of each department.

2. Prepare journal entries that reflect these cost transfers.

SOLUTION

Mixing Cooking Packaging

1. Direct materials……………………… $ 825,000 $ 379,500 $ 330,000