Question

Flowchart of Accounts Related to Service and Processing Departments

Alcoa Inc. is the world's largest producer of aluminum products. One product that Alcoa manufactures is aluminum sheet products for the aerospace industry. The entire output of the Smelting Department is transferred to the Rolling Department. Part of the fully processed goods from the Rolling Department are sold as rolled sheet, and the remainder of the goods are transferred to the Converting Department for further processing into sheared sheet.

Prepare a chart of the flow of costs from the processing department accounts into the finished goods accounts and then into the cost of goods sold account. The relevant accounts are as follows:

Cost of Goods Sold Finished Goods—Rolled Sheet
Materials Finished Goods—Sheared Sheet
Factory Overhead—Smelting Department Work in Process—Smelting Department
Factory Overhead—Rolling Department Work in Process—Rolling Department
Factory Overhead—Converting Department Work in Process—Converting Department
Answer the following questions.

1. Materials flow to which department?

2. The costs from Factory Overhead-Converting Department flow to which department?

3. The costs from Work in process-Smelting Department flow to which department?

4. The costs from Finished Goods-Sheared Sheet flow to which account?

Answer 1

Answer:

Main route:

Smelting --> Rolling --> Converting --> Sheared Sheet

Secondary route     -->

Smelting --> Rolling -->  rolled sheet

1) Smelting trasnferred materials into Rolling

2) It will be part of that department work in process inventory

"WIP SConverting debit then factorty overhead credit"

Later it will be transferred out as a complete process therefore,

Finished good Inventory - Shared sheet

3) the Smelting department transfer the entire of his output into Rolling department

4) the finished good will become cost of good solg once they are sold.

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Explanation:

We have to read he description of how the processing system works and check to whichdeparmtent are the goods being transferred or sold.