PROCESS COSTING

1. Cost of Production Report:
A company's Department 2 costs for June were:
Cost from Department 1
Cost added in Department 2:
Materials
Labor
Factory overhead (FOH)

$16320
43,415
56,100
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
Units transferred to finished goods
Units still in process (50% materials, 25% conversion)
Cost Charged to the Department:
Cost from preceding department:
Transferred in during the month (12,000 units)
Cost added by department:
Materials
Labor
Factory overhead
Total cost added
Total cost to be accounted for

12,000
7,000
5,000
Total cost

Unit cost

$16,320
-------

$1.36
------

$43,415
56,100
58,575
------$158,090
-------$174,410
=======

$4.57
6.80
7.10
------$18.47
------$19.83
=====

Cost Accounted for as Follows:
Transferred to finished goods (7,000 × $19.83)
Work in process ending inventory:
Cost from preceding department
Materials (5,000 × 50% × $4.75)
Labor (5,000 × 25% × $6.80)
Factory overhead (5,000 × 25% × $7.10)

$138,810
$6,800
11,425
8,500
8,875
--------

Total cost accounted for

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

35,600
-------$174,410
=======

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:

Transferred in from Department 1
Transferred out to Department 3
In process at the end of December

55,000 liters
39,500liters
10,500 liters

(with 1/2 labor and factory overhead)