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 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) Total cost accounted for

12,000 7,000 5,000 Total cost $16,320 ------$43,415 56,100 58,575 ------$158,090 -------$174,410 ======= Unit cost $1.36 -----$4.57 6.80 7.10 ------$18.47 ------$19.83 ===== $138,810 $6,800 11,425 8,500 8,875 --------

35,600 -------$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:

Transferred in from Department 1 Transferred out to Department 3 In process at the end of December (with 1/2 labor and factory overhead)

55,000 liters 39,500liters 10,500 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 Labor cost in department 2 Applied factory overhead Required: A cost of production report for department 2 for December.

$1.80 $27,520 $15480

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 Units still in process (1/3 labor and overhead) Units lost in process 39,500 10,500 5,000 ------Cost Charged to the Department: Cost from preceding department: Transferred in during the month $99,000 -------Cost added by the department: Labor [39,500 + (1/3 10,500) = 43,000 units] Factory overhead $27,520 $15,480 -------Total cost added Adjustment for lost units Total cost to be accounted for Cost Accounted for as Follows: Transferred to next department (39,500 $2.98) Work in process - ending inventory: Cost from preceding department (10,500 $1.98) Labor (10,500 1/3 $0.64) Factory overhead (10,500 1/3 $0.36) Total cost accounted for -------$142,000 ======= $43,000 $0.64 $0.36 -----$1.00 $0.18* -----$2.98 ===== $117,710 $20,790 2,240 1,260 -------$1.80 -----Total Cost 55,000 ====== Unit Cost

24,290 ------$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 Cost added by department: Materials Labor Factory overhead (FOH) The following information was obtained from the department's quantity schedule: Units received Units transferred out Units still in process

$20,000 $21,816 7,776 4,104 --------

33,696

5,000 4,000 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 Units still in process (32 labor and overhead) 4,000 1,000 ------Cost Charged to the Department: Cost from preceding department: Transferred in during the month Cost added by the department: Materials Labor [39,500 + (1/3 10,500) = 43,000 units] Factory overhead $20,000 -------$21,816 $7,776 $4,104 -------Total cost added Total cost to be accounted for Cost Accounted for as Follows: Transferred to next department (4,000 $11.80) Work in process - ending inventory: Cost from preceding department (1000 $4.00) Materials (1,000 0.32 $5.05) Labor (1,000 0.32 $1.80) Factory overhead (10,500 0.32 $0.95) Total cost accounted for $33,696 -------$53,696 ======= $4.00 -----$5.05 $1.80 $0.95 -----$7.80 -----$11.80 ===== $47,200 $4,000 1,616 576 304 -------Total Cost 5,000 ====== Unit Cost

6,496 ------$53,696 ======

Additional Computations Equivalent units of production: Materials, labor, and factory overhead = 4,000 + (1,000 32%) = 4,320 units

Units in Process 50% were 40% complete 20% were 30% complete 30% were 20% complete

Equivalent 0.20 0.06 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. 2. Equivalent units of production calculation. The cost per equivalent unit for conversion costs.

Solution: (1) Quantity Schedule: Units received from preceding department A Units transferred to finished goods Units still in process Equivalent Production: Transferred to finished goods Ending inventory Transferred in from Department A 15,000 5,000 ------20,000 ====== Materials 15,000 5,000 -------20,000 ====== Conversion 15,000 3,000 ------20,000 ====== 15,000 5,000 --------

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 Units still in process (All materials - 2/3 labor and overhead) Units lost in process (Abnormal loss - 1/2 materials, labor, and overhead) 50,000 9,000 1,000 ------Cost Charged to the Department: Cost from preceding department: Transferred in during the month (60,000 units) Cost added by the department: Materials Labor Factory overhead $212,400 -------$41,650 $101,700 $56,500 -------Total cost added Total cost to be accounted for Cost Accounted for as Follows: Transferred to next department (50,000 $7.04) Transferred to Factory Overhead: From preceding department (1,000 $3.54) Materials (1,000 1/2 $0.70) Labor (1,000 1/2 $1.80) Factory overhead (1,000 1/2 $1.00) Work in process - ending inventory: Cost from preceding department (9000 $3.54) Materials (9,000 0.70) Labor (9,000 2/3 1.80) Factory overhead (9,000 2/3 1.00) Total cost accounted for $199,850 -------$412,250 ======= $3.54 -----$1.70 $1.80 $1.00 -----$3.50 -----$7.04 ===== $352,000 $3,540 350 900 500 -------$31,860 6,300 10,800 6,000 -------Total Cost 60,000 ====== Unit Cost

5,290

54,960 ------$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:

Received from department A Transferred to finished goods Ending inventory (70% complete) Cost incurred: Materials Labor and factory overhead

Units 12,000 9,000 2,000

Dollars $84,000

18,000 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 Units still in process Units lost in process (Normal Spoilage 9000 5%) Units lost in process (Abnormal Spoilage 1,000 - 450) Cost Charged to the Department: Cost from preceding department: Transferred in during the month (12,000 units) Cost added by the department: Materials Labor and factory 0verhead $84,000 -------$18,000 $45,600 -------Total cost added Total cost to be accounted for Cost Accounted for as Follows: Transferred to finished goods [(9,000 $13) + (450* $11)] Transferred to Factory Overhead (550** $11) Work in process - ending inventory: Cost from preceding department (2000 $7.00) Labor and factory overhead (2,000 70% $4) Total cost accounted for $63,600 -------$147,600 ======= $7.00 -----$2.00 $4.00 -----$6.00 -----$13.00 ===== $121,950 6,050 $14,000 5,600 -------19,600 ------$147,600 ====== 9,000 2,000 450 550 ------Total Cost

12,000 ====== Unit Cost

*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 cost Materials Conversion cost (labor + factory overhead) Transferred to finished goods Ending work in process inventory (50% complete) Required: Cost of production report.

30,000 units $135,000 $12,500 $139,340 25,000 units 4,200 units

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 Units still in process (50% complete) Units lost in process (Normal Spoilage 25,000 3%) Units lost in process (Abnormal Spoilage 800 - 750) 25,000 4,200 750 50

30,000