563Cost of Production Report: Accounting for Spoiled Units and Increase in ProduchonProblem 13-6: Preparation of Cost of Production Report wiehNormal Lost Units.The Molave Company uses FIFO process cost accounting system. On Aprn1, the firm had 2,000 units in process in the Assembly Department, thesecond of the three producing departments. All materials had been addedto 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 departmentMaterialsLaborOverheadP83,60015,16022,84817,760During the month of April, an additional 30,000 units were transferredinto the department with total prior department costs of P1,296,172. Also,during April, additional costs were incurred in the department as fol-lows:MaterialsLaborOverheadP226,593576,468449,838A 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 monthand 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 lostunits. Assume the lost units occur at the beginning of production inthe department and that all lost units came from the work trans-ferred into the department during April.

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:

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:

FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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