Question

2. Cost of Production Report - Normal Loss: For December, the Production Control Department of Carola Chemical, Inc., reported the following production data for Department 2: Transferred in from Department 1 55,000 liters Transferred out to Department 3 39,500liters In process at the end of December (with 1/2 labor and factory overhead) 10,500 liters All materials were put into process in Department 1. The cost department collected following figures for department 2: Unit cost for units transferred in from department 1 Labor cost in department 2 Applied factory overhead $1.80 $27,520 $15480 Required: A cost of production report for department 2 for December.

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Answer 1

ANSWER

Cost of Production Report - Department 2
Quantity Schedule:
Units received from preceding department		55,000
Units tfd to next department	39,500
Units still in process (1/3 labor and OH)	10,500
Units lost in process	5,000	55,000
Cost Charged to the Department:	Total Cost	Unit Cost
Cost from preceding department:
Transferred in during the month	99,000	1.80
Cost added by the department:
Labor {39,500 + (1/3 * 10,500) = 43,000 units}	27,520	0.64
Factory OH	15,480	0.36
Total cost added	43,000	1.00
Adjustment for lost units {(99,000 / 50,000) - 1.80} = 0.18		0.18
Total cost to be accounted for	142,000	2.98
Cost Accounted for as Follows:
Transferred to next department (39,500 * $2.98)		117,710
Work in process - ending inventory:
Cost from preceding department (10,500 * $1.98)	20,790
Labor (10,500 * 1/3 * $0.64)	2,240
Factory overhead (10,500 * 1/3 * $0.36)	1,260	24,290
Total cost accounted for		142,000