1.

 COST OF PRODUCTION REPORT:

A company's Department 2 costs for June were:
Cost from Department 1 $16320
Cost added in Department
 
2:
     Materials 43,415
     Labor 56,100
Factory overhead (FOH) 58,575
The quantity schedule shows 12,000 units were received during the month
from Department 1; 7,000 units were transferred to finished goods; and
5,000 units in process at the end of June were 50% complete as
to materials cost and 25% complete as to conversion cost.
Required: Prepare Cost of production report.
 

SOLUTION:
Department 2
Cost of Production Report
For the Month of June, 19___
Quantity Schedule:    
Units received from department 1   12,000
Units transferred to finished goods 7,000  
Units still in process (50% materials, 25%
5,000  
conversion)
Cost Charged to the Department: Total cost Unit cost
Cost from preceding department:    
     Transferred in during the month (12,000 units) $16,320 $1.36
  ------- ------
Cost added by department:    
     Materials $43,415 $4.57
     Labor 56,100 6.80
     Factory overhead 58,575 7.10
  ------- -------
     Total cost added $158,090 $18.47
  -------- -------
Total cost to be accounted for $174,410 $19.83
  ======= =====
Cost Accounted for as Follows:    
Transferred to finished goods (7,000 × $19.83)   $138,810
Work in process ending inventory:    
Cost from preceding department $6,800  
Materials (5,000 × 50% × $4.75) 11,425  
Labor (5,000 × 25% × $6.80) 8,500  
Factory overhead (5,000 × 25% × $7.10) 8,875  
  -------- 35,600
    --------
Total cost accounted for   $174,410
    =======
Additional computations:
Equivalent production:
Materials = 7,000 + (5,000 × 50%) = 9,500 units
Labor and factory overhead = 7,000 + (5,000 × 25%) = 8,250 units

2. COST OF PRODUCTION REPORT - NORMAL LOSS:

For December, the Production Control Department of Carola Chemical, Inc.,
reported the following production data for Department 2:
 
55,000
Transferred in from Department 1
liters
Transferred out to Department 3 39,500liters
In process at the end of December (with 1/2 labor and factory 10,500
overhead) liters
All materials were put into process in Department 1. The cost department
collected following figures for department 2:
 
Unit cost for units transferred in from department
$1.80
1
Labor cost in department 2 $27,520
Applied factory overhead $15480
Required: A cost of production report for department 2 for December.
 

SOLUTION:
Carola Chemical Inc.
Department 2
Cost of Production Report
For the Month of December. 19____
 
Quantity Schedule:    
Units received from preceding department   55,000
    ======
Units transferred to next department 39,500  
Units still in process (1/3 labor and overhead) 10,500
Units lost in process 5,000 55,000
  ------- ======
Cost Charged to the Department: Total Cost Unit Cost
Cost from preceding department:    
     Transferred in during the month $99,000 $1.80
  -------- ------
Cost added by the department:    
     Labor [39,500 + (1/3 × 10,500) = 43,000 units] $27,520 $0.64
     Factory overhead $15,480 $0.36
  -------- ------
Total cost added $43,000 $1.00
Adjustment for lost units   $0.18*
  -------- ------
Total cost to be accounted for $142,000 $2.98
======= =====
Cost Accounted for as Follows:    
Transferred to next department (39,500 × $2.98) $117,710
Work in process - ending inventory:
Cost from preceding department (10,500 × $1.98) $20,790
Labor (10,500 × 1/3 × $0.64) 2,240
Factory overhead (10,500 × 1/3 × $0.36) 1,260 24,290
-------- -------
Total cost accounted for $142,000
======
*Adjustment for lost units:
Formula for Calculation:
(Cost from preceding departments / Units from preceding departments -
Lost units) - Unit cost from preceding department
(99,000 / 50,000) - 1.80 = $0.18
OR
(5,000 × 1.80) = $9,000 / 50,000 = $0.18
 

3. COST OF PRODUCTION REPORT:
Brooks Inc. uses process costing. The costs for Department 2 for April were:
 
Cost from preceding department   $20,000
Cost added by department:    
     Materials $21,816  
     Labor 7,776  
     Factory overhead (FOH) 4,104 33,696
  --------  
     
The following information was obtained from the department's quantity
schedule:
     
     Units received 5,000  
     Units transferred out 4,000  
     Units still in process 1,000  
The degree of completion of the work in process as to costs originating in
department 2 was: 50% of units were 40% complete; 20% were 30%
complete; and the balance were 20% complete.
Required: The cost of production report for Department 2 for April.

SOLUTION:
Brooks Inc.
Department 2
Cost of Production Report
For the month of April, 19|____
 
Quantity Schedule:    
Units received from preceding department   5,000
    ======
Units transferred to next department 4,000  
Units still in process (32 labor and overhead) 1,000 5,000
  ------- ======
Cost Charged to the Department: Total Cost Unit Cost
Cost from preceding department:    
     Transferred in during the month $20,000 $4.00
  -------- ------
Cost added by the department:
     Materials $21,816 $5.05
     Labor [39,500 + (1/3 × 10,500) = 43,000 units] $7,776 $1.80
     Factory overhead $4,104 $0.95
  -------- ------
Total cost added $33,696 $7.80
  -------- ------
Total cost to be accounted for $53,696 $11.80
======= =====
Cost Accounted for as Follows:    
Transferred to next department (4,000 × $11.80) $47,200
Work in process - ending inventory:
     Cost from preceding department (1000 × $4.00) $4,000
     Materials (1,000 × 0.32 × $5.05) 1,616
     Labor (1,000 × 0.32 × $1.80) 576
     Factory overhead (10,500 × 0.32 × $0.95) 304 6,496
-------- -------
Total cost accounted for $53,696
======
Additional Computations
Equivalent units of production:
Materials, labor, and factory overhead = 4,000 + (1,000  32%) = 4,320
units
 
  Units in Process Equivalent
  50% were 40% complete 0.20
  20% were 30% complete 0.06
  30% were 20% complete 0.06
    --------
  Total 0.32
    =====
  OR
  50% of 1,000 units × 40% = 200 units
  20% of 1,000 units × 30% = 60 units
  30% of 1,000 units × 20% = 60 units
            Total                   =320 units
 

4. EQUIVALENT UNITS OF PRODUCTION:

During April, 20,000 units were transferred in from department A at a cost
of $39,000. Materials cost of $6,500 and conversion cost of $9,000 were
added in department B. On April 30, department B had 5,000 units of work
in process 60% complete as to conversion as costs. Materials are added in
the beginning of the process in department B.
Required:

1. Equivalent units of production calculation.

2. The cost per equivalent unit for conversion costs.
 
SOLUTION:
(1) Quantity Schedule:    
Units received from preceding department A   20,000
    ======
Units transferred to finished goods 15,000  
Units still in process 5,000 20,000
  -------- ======
Equivalent Production:    
  Transferred in
from Department Materials Conversion
 A
Transferred to finished
15,000 15,000 15,000
goods
Ending inventory 5,000 5,000 3,000
  ------- -------- -------
  20,000 20,000 20,000
  ====== ====== ======
(2) cost per equivalent unit for conversion costs:
      $9,000 / 18,000 = $0.50 per unit
 

5. COSTING OF UNITS TRANSFERRED OUT; ABNORMAL LOSS

During February, the Assembly department received 60,000 units from
Cutting department at a unit cost of $3.54. Costs added in the Assembly
department were: materials, $41,650; labor, $101,700; and factory
overhead. $56,500. There was no beginning inventory. Of the 60,000 units
received, 50,000 were transferred out; 9,000 units were in process at the
end of the month (all materials, 2/3 converted); 1,000 lost units were 1/2
complete as to materials and conversion costs. The entire loss is considered
abnormal and is to be charged to factory overhead.
Required: Cost of production report.
 

SOLUTION:

ASSEMBLY DEPARTMENT
COST OF PRODUCTION REPORT
FOR THE MONTH OF APRIL, 19|____
 
Quantity Schedule:    
Units received from preceding department   60,000
    ======
Units transferred to next department 50,000  
Units still in process (All materials - 2/3 labor and
9,000
overhead)
Units lost in process (Abnormal loss - 1/2 materials,
labor, and overhead) 1,000 60,000
  ------- ======
Cost Charged to the Department: Total Cost Unit Cost
Cost from preceding department:    
     Transferred in during the month (60,000 units) $212,400 $3.54
  -------- ------
Cost added by the department:
     Materials $41,650 $1.70
     Labor $101,700 $1.80
     Factory overhead $56,500 $1.00
  -------- ------
Total cost added $199,850 $3.50
  -------- ------
Total cost to be accounted for $412,250 $7.04
======= =====
Cost Accounted for as Follows:    
Transferred to next department (50,000 × $7.04) $352,000
Transferred to Factory Overhead:
     From preceding department (1,000 × $3.54) $3,540  
     Materials (1,000 × 1/2 × $0.70) 350
     Labor (1,000 × 1/2 × $1.80) 900  
     Factory overhead (1,000 × 1/2 × $1.00) 500 5,290
  --------  
Work in process - ending inventory:
     Cost from preceding department (9000 × $3.54) $31,860
     Materials (9,000 × 0.70) 6,300
     Labor (9,000 × 2/3 × 1.80) 10,800
     Factory overhead (9,000 × 2/3 × 1.00) 6,000 54,960
-------- -------
Total cost accounted for $412,250
======
Additional Computations
Equivalent Production:
Materials = 50,000 + 9,000 + 1,000/2 lost units = 59,500 units
Labor and factory overhead = 50,000 + (9,000 × 2/3) + 1,000/2 lost units
= 56,500
Unit Cost:
Materials = $41,650 / 59,500 = $0.70 per unit
Labor = $101,700 / 56,500 = $1.80 per unit
Factory overhead = $56,500 / 56,500 = $1.00 per unit
 

6. COST OF PRODUCTION REPORT; NORMAL AND ABNORMAL LOSS:

The Sterling Company uses process costing. In department B, conversion
costs are incurred uniformly throughout the process. Materials are added at
the end of the process, following inspection. Normal spoilage is expected to
be 5% of good output.
The following information related to department B for January:
 
  Units Dollars
Received from department A 12,000 $84,000
Transferred to finished goods 9,000  
Ending inventory (70%
2,000  
complete)
Cost incurred:    
     Materials   18,000
     Labor and factory overhead   45,600
     
Required: Cost of Production report for department B.

SOLUTION:
THE STERLING COMPANY
DEPARTMENT B
COST OF PRODUCTION REPORT
FOR THE MONTH OF JANUARY
Quantity Schedule:    
Units received from preceding department   12,000
    ======
Units transferred to finished goods 9,000  
Units still in process 2,000
Units lost in process (Normal Spoilage  9000 × 5%) 450
Units lost in process (Abnormal Spoilage  1,000 - 450) 550 12,000
  ------- ======
Cost Charged to the Department: Total Cost Unit Cost
Cost from preceding department:    
     Transferred in during the month (12,000 units) $84,000 $7.00
  -------- ------
Cost added by the department:
     Materials $18,000 $2.00
     Labor and factory 0verhead $45,600 $4.00
  -------- ------
Total cost added $63,600 $6.00
  -------- ------
Total cost to be accounted for $147,600 $13.00
======= =====
Cost Accounted for as Follows:    
Transferred to finished goods [(9,000 × $13) +
$121,950
(450* × $11)]
Transferred to Factory Overhead (550** × $11) 6,050
Work in process - ending inventory:
     Cost from preceding department (2000 × $7.00) $14,000
     Labor and factory overhead (2,000 × 70% × $4) 5,600 19,600
-------- -------
Total cost accounted for $147,600
======
*Normal spoilage
**Abnormal spoilage
Additional Computations
Equivalent Production:
Materials = 9,000 units
Labor and factory overhead = 9,000 + (2,000 × 70%) + 450 + 550
Unit Costs:
Materials = $18,000 / 9,000 = $2.00 per unit
Labor and factory overhead = $45,600 / 11,400 = $4.00 per unit
 

7. COST OF PRODUCTION REPORT; SPOILED UNITS - NORMAL AND

ABNORMAL:
Hettinger Inc., uses process costing system in its two producing
departments. In department 2, inspection takes place at the 96% stage of
completion, after which materials are added to good units. A spoilage rate of
3% of good  output is considered normal.
Department 2 records for April shows:
 
Received from department 1 30,000 units
     cost $135,000
Materials $12,500
Conversion cost (labor + factory overhead) $139,340
Transferred to finished goods 25,000 units
Ending work in process inventory (50% complete) 4,200 units
Required: Cost of production report.

SOLUTION:
THE STERLING COMPANY
DEPARTMENT B
COST OF PRODUCTION REPORT
FOR THE MONTH OF JANUARY
Quantity Schedule:    
Units received from preceding department   30,000
    ======
Units transferred to finished goods 25,000  
Units still in process (50% complete) 4,200
Units lost in process (Normal Spoilage  25,000 × 3%) 750
Units lost in process (Abnormal Spoilage  800 - 750) 50 30,000
  ------- ======
Cost Charged to the Department: Total Cost Unit Cost
Cost from preceding department:    
     Transferred in during the month (30,000 units) $135,000 $4.50
  -------- ------
Cost added by the department:
     Materials $12,500 $0.50
     Labor and factory 0verhead (Conversion cost) $139,340 $5.00
  -------- ------
Total cost added $151,840 $5.50
  -------- ------
Total cost to be accounted for $286,840 $10.00
======= =====
Cost Accounted for as Follows:    
Transferred to finished goods:
Cost of completed units (25,000 × $10.00) $250,000
Normal spoilage - all related to units transferred to
   
finished goods:
     Cost from preceding department (750 × $4.50) 3,375  
     Conversion cost (720 × $5.00) 3,600 $256,975
  --------  
Transferred to Factory Overhead - Abnormal spoilage:
     Cost from preceding department (50 × $4.50) $225  
      Conversion cost (48 × $5.00) 240 465
  --------  
Work in process - ending inventory:
     Cost from preceding department (4,200 × $4.50) $18,900
     Labor and factory overhead (2,100 × $5) 10,500 29,400
-------- -------
Total cost accounted for $286,840
======
Additional Computations
Equivalent Production:
Materials = 25,000 units
Labor and factory overhead = 25,000 + (42,00 × 50%) + (750 × 96%)  +
(50 ×  96%)
= 27,888 units
Unit Costs:
Materials = $12,500 / 25,000 = $.50 per unit
Labor and factory overhead = $139,340 / 27,888 = $5.00 per unit
 
8.COMPUTATION OF EQUIVALENT PRODUCTION:
Pietra-Gonatas, Inc. uses process costing to account for the costs of its only
product, product D. Production takes place in three departments;
Fabrication, Assembly, and Packaging.
At the end of the fiscal year, June 30, the following inventory of product D is
on hand:

 No unused raw materials or packaging materials.

 Fabrication department: 300 units, 1/3 complete as to raw materials
and 1/2 complete as to direct labor
 Assembly department: 1,000 units, 2/5 complete as to direct labor.
 Packaging department: 100 units, 3/4 complete as to packaging
materials and 1/4 complete as to direct labor.
 Shipping for finished goods are: 400 units.
Required:

1. The number of equivalent units of raw materials in all inventories at

June 30.
2. The number of equivalent units of the fabrication department's direct
labor in all inventories at June 30
3. The number of equivalent units of packaging materials in all
inventories at June 30.
SOLUTION:
(1)  
Equivalent units of raw materials
 
in all inventories, June 30, 19__
     Fabrication department (300 × 1/3) 100
     Assembly department 1,000
     Packaging department 100
     Shipping area 400
  --------
  1,600
  =======
(2)  
Equivalent units of Fabrication department's direct labor in
 
all inventories, Jun 30, 19___
     Fabrication department (300 × 1/3) 150
     Assembly department 1,000
     Packaging department 100
     Shipping area 400
  ---------
  1,650
  =======
   
(3)  
Equivalent units of packaging materials in all inventories,
 
June 30, 19___
     Packaging department (300 × 4/3) 75
     Shipping area 400
  -------
  475
  ======
1.