ABADDON Tool Company uses a process cost system with a fifo cost assumption to account for the production of its only product, which is manufactured in two departments. Units are started in Fabricating Department and then transferred to the Finishing Department, where they are completed. Units are inspected at the 60% stage of conversion in the Fabricating Department and at the end of the process in the Finishing Department. Materials are added at the beginning of the process in both departments. Unit of product spoiled in Fabricating department has no salvage value; however, units found to be spoiled at the end of the Finished process have a salvage value of P1 each. Good units are transferred from the Finishing Department to Finished Goods Inventory at cost, and spoiled units are transferred to Spoiled Goods Inventory at their salvage value. The unrecoverable cost of spoilage in both departments is viewed by management as an internal failure cost and charged to Factory overhead control. Data for April are: Finishing 3,000 (100%,40%,40%) Fabricating Units in Beginning 2,000 (100%,70%,70%) Units Started 9,000 Units transferred to the next dept 9,000 9,900 Units spoiled in process 500 100 2,000 (100%,60%,60%) Units ending 1,500 (100%,40%,40%) Beginning Inventory Cost DM-P1,900; DL-P340; OH-P1,020 TI-P6,100; DM-P3,500; DL-P520; OH-P780 Current Period Cost DM-P9,180; DL-P2,125; OH-P6,375 DM-P10,800; DL-P4,000; OH-P6,000 PREPARE THE COST OF PRODUCTION REPORT

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ABADDON Tool Company uses a process cost system with a fifo cost assumption to account for the production of its only product, which is manufactured in two departments. Units are started in Fabricating Department
and then transferred to the Finishing Department, where they are completed. Units are inspected at the 60% stage of conversion in the Fabricating Department and at the end of the process in the Finishing Department.
Materials are added at the beginning of the process in both departments. Unit of product spoiled in Fabricating department has no salvage value; however, units found to be spoiled at the end of the Finished process have
a salvage value of P1 each. Good units are transferred from the Finishing Department to Finished Goods Inventory at cost, and spoiled units are transferred to Spoiled Goods Inventory at their salvage value. The unrecoverable
cost of spoilage in both departments is viewed by management as an internal failure cost and charged to Factory overhead control. Data for April are:
Fabricating
Finishing
Units in Beginning
2,000 (100%,70%,70%)
3,000 (100%,40%,40%)
Units Started
9,000
Units transferred to the next dept
9,000
9,900
Units spoiled in process
500
100
Units ending
1,500 (100%,40%,40%)
2,000 (100%,60%,60%)
Beginning Inventory Cost
DM-P1,900; DL-P340; OH-P1,020
TI-P6,100; DM-P3,500; DL-P520; OH-P780
Current Period Cost
DM-P9,180; DL-P2,125; OH-P6,375
DM-P10,800; DL-P4,000; OH-P6,000
PREPARE THE COST OF PRODUCTION REPORT
Transcribed Image Text:ABADDON Tool Company uses a process cost system with a fifo cost assumption to account for the production of its only product, which is manufactured in two departments. Units are started in Fabricating Department and then transferred to the Finishing Department, where they are completed. Units are inspected at the 60% stage of conversion in the Fabricating Department and at the end of the process in the Finishing Department. Materials are added at the beginning of the process in both departments. Unit of product spoiled in Fabricating department has no salvage value; however, units found to be spoiled at the end of the Finished process have a salvage value of P1 each. Good units are transferred from the Finishing Department to Finished Goods Inventory at cost, and spoiled units are transferred to Spoiled Goods Inventory at their salvage value. The unrecoverable cost of spoilage in both departments is viewed by management as an internal failure cost and charged to Factory overhead control. Data for April are: Fabricating Finishing Units in Beginning 2,000 (100%,70%,70%) 3,000 (100%,40%,40%) Units Started 9,000 Units transferred to the next dept 9,000 9,900 Units spoiled in process 500 100 Units ending 1,500 (100%,40%,40%) 2,000 (100%,60%,60%) Beginning Inventory Cost DM-P1,900; DL-P340; OH-P1,020 TI-P6,100; DM-P3,500; DL-P520; OH-P780 Current Period Cost DM-P9,180; DL-P2,125; OH-P6,375 DM-P10,800; DL-P4,000; OH-P6,000 PREPARE THE COST OF PRODUCTION REPORT
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