Chapter 5, Problem 11P

To determine

Prepare a cost of production summary for the month March.

Explanation of Solution

Prepare a cost of production summary for the month March.

G Inc.
Cost of production summary
Forming department
For the month ended March 31
Particulars	Amount($)	Amount($)	Amount($)
Cost of work in process, beginning of month
Cost in shaping		$8,000(1)
Cost in forming:
Materials	$500 (3)
Labor	1,000 (3)
Factory overhead	750 (3)	$2,250 (2)	$10,250
Cost of goods received from shaping during the month			36,000
Cost of production for month:
Materials		$4,000
Labor		8,000
Factory overhead		6,000	18,000
Total costs accounted for			$64,250
Unit output for month:
Finished and transferred to finished goods			8,000
Equivalent units of work-in process (3,000 units, 1/3 complete)			1,000
Total equivalent production			9,000
Unit cost for month:
Materials $\left[\left(\$500+\$4,000\right)/9,000\right]$			$0.50
Labor $\left[\$1,000+\$8,000/9,000\right]$			1
Factory overhead $\left[\$750+\$6,000/9,000\right]$			0.75
Total			$2.25
Inventory cost:
Cost of goods finished and transferred to finished goods:
Cost in shaping $\left(8,000\times \$4\right)$		$32,000
Cost in forming $\left(8,200\times \$2.25\right)$		18,000
Total			$50,000
cost of work-in process, end of month:
Cost in shaping $\left(3,000\times \$4\right)$		$12,000
Cost in forming:
Materials $\left(3,000\times 1/3\times \$0.50\right)$	$500
Labor $\left(3,000\times 1/3\times \$1\right)$	1,000
Factory overhead $\left(3,000\times 1/3\times \$0.75\right)$	750	2,250	$14,250
Total production costs accounted for			$64,250

Table (1)

Working note:

1. 1) Calculate the cost for shaping:

$\begin{array}{c}\text{Unit cost for shaping}=\frac{\$36,000}{9,000}\\ =\$4\\ \text{Cost for shaping}=\$4\times 2,000\text{ units}\\ \text{=\$8,000}\end{array}$

1. 2) Calculate the cost in beginning work-in process:

$\begin{array}{c}\text{Beginning work-in process cost}=\$10,250-\left(\$4\times 2,000\right)\\ =\$10,250-\$8,000\\ =\$2,250\end{array}$

1. 3) Calculation of ratio:

Particulars	A	B	$\left(\text{C}\right)= \frac{\left(\text{A}\right)}{\left(\text{B}\right)}$	D	$\left(\text{E}\right)\text{=}\left(\text{C}\right)\times \left(\text{D}\right)$
Material cost in beginning work-in process	$4,000	$18,000	22.22%	$2,250	$500
Labor cost in beginning work-in process	$8,000	$18,000	44.44%	$2,250	1,000
Factory overhead cost in beginning work in process	$6,000	$18,000	33.33%	$2,250	$750
Total	$18,000		100%		$2,250

Table (2)

1. 4) Calculate the ending work-in process:

Particulars	Units
Beginning work in process	2,000
Received from shipping	9,000
Total	11,000
Units finished	8,000
Ending work in process	3,000

Table (3)