Preparation of Cost of Production Report with Normal Lost Units. The Molave Company uses FIFO process cost accounting system. On April 1, the firm had 2,000 units in process in the Assembly Department, the second of the three producing departments. All materials had been added to this beginning inventory, but labor and overhead were only 60% com- plete. Costs applicable to the beginning work in process inventory fol- low: Problem 13-6: Transferred In costs from prior department Materials Labor Overhead P83,600 15,160 22,848 17,760 During the month of April, an additional 30,000 units were transferred into the department with total prior department costs of P1,296,172. Also, during April, additional costs were incurred in the department as fol- lows: Materials Labor Overhead P226,593 576,468 449,838 A total of 30,720 units were transferred out to the third department dur- ing the month, 1,350 units were still in production at the end of the month and 380 units were lost in production. They were considered normal spoil age. All materials had been added to the ending work in process inven tory, but labor and overhead were only 80% complete. Required: 1. Compute the equivalent production units ignoring spoiled units. 2. Prepare a cost of production report for the Assembly Departmen Show an adjustment of transferred in prior department costs for los units. Assume the lost units occur at the beginning of production the department and that all lost units came from the work tran ferred into the department during April.
Preparation of Cost of Production Report with Normal Lost Units. The Molave Company uses FIFO process cost accounting system. On April 1, the firm had 2,000 units in process in the Assembly Department, the second of the three producing departments. All materials had been added to this beginning inventory, but labor and overhead were only 60% com- plete. Costs applicable to the beginning work in process inventory fol- low: Problem 13-6: Transferred In costs from prior department Materials Labor Overhead P83,600 15,160 22,848 17,760 During the month of April, an additional 30,000 units were transferred into the department with total prior department costs of P1,296,172. Also, during April, additional costs were incurred in the department as fol- lows: Materials Labor Overhead P226,593 576,468 449,838 A total of 30,720 units were transferred out to the third department dur- ing the month, 1,350 units were still in production at the end of the month and 380 units were lost in production. They were considered normal spoil age. All materials had been added to the ending work in process inven tory, but labor and overhead were only 80% complete. Required: 1. Compute the equivalent production units ignoring spoiled units. 2. Prepare a cost of production report for the Assembly Departmen Show an adjustment of transferred in prior department costs for los units. Assume the lost units occur at the beginning of production the department and that all lost units came from the work tran ferred into the department during April.
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter5: Process Cost Accounting—general Procedures
Section: Chapter Questions
Problem 6E: The records of Burris Inc. reflect the following data: Work in process, beginning of month2,000...
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Equivalent production computation ignoring spoiled units
Cost of production report
Transcribed Image Text:563
Cost of Production Report: Accounting for Spoiled Units and Increase in Production
Problem 13-6: Preparation of Cost of Production Report wieh
Normal Lost Units.
The Molave Company uses FIFO process cost accounting system. On Aprn
1, the firm had 2,000 units in process in the Assembly Department, he
second of the three producing departments. All materials had been added
to this beginning inventory, but labor and overhead were only 60% com-
plete. Costs applicable to the beginning work in process inventory 1o1-
low:
Transferred In costs from prior department
Materials
Labor
Overhead
P83,600
15,160
22,848
17,760
During the month of April, an additional 30,000 units were transferred
into the department with total prior department costs of P1,296,172. Also,
during April, additional costs were incurred in the department as fol-
lows:
Materials
Labor
Overhead
P226,593
576,468
449,838
A total of 30,720 units were transferred out to the third department dur-
´ing the month, 1,350 units were still in production at the end of the month
and 380 units were lost in production. They were considered normal spoil-
age. All materials had been added to the ending work in process inven-
tory, but labor and overhead were only 80% complete.
Required:
1.
Compute the equivalent production units ignoring spoiled units.
2.
Prepare a cost of production report for the Assembly Department.
Show an adjustment of transferred in prior department costs for lost
units. Assume the lost units occur at the beginning of production in
the department and that all lost units came from the work trans-
ferred into the department during April.
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