Chapter 6, Problem 10P

Mt. Palomar Manufacturing Co. uses a process cost system. Its manufacturing operation is carried on in two departments: Machining and Finishing. The Machining Department uses the weighted average cost method, and the Finishing Department uses the FIFO cost method. Materials are added in both departments at the beginning of operations, but the added materials do not increase the number of units being processed. Units are lost in the Machining Department throughout the production process, and inspection occurs at the end of the process. The lost units have no scrap value and are considered to be a normal loss.

Production statistics for July show the following data:

Required:

1. 1. Prepare a cost of production summary for each department. (Round unit costs to three decimal places.)
2. 2. Which department will have an easier time determining how its unit costs compare from month to month? Why?