Question

ABM Company uses two departments to produce a product. The following data were taken from the books for the month of January 2012 Department 1 Department 2 Units: Started 60,000 40,000 Completed and transferred 30,000 In Process end 20,000 10,000 Stage of completion 75% 80% Costs: Materials P480,000 P245,000 Labor 330,000 190,000 Factory Overhead 220,000 114,000 Department 1- all materials added at the beginning of the process. Department 2- 50% of the materials are added at the beginning of the process, remaining 50% added at the end of the process. Required: Cost of Production report

Answer 1

ABM Company Cost of Production Report - Department 1 Weighted Average Method % EUP- % EUP- Units Materials Materials Conversion Conversion Units completed and transferred 40,000 100% 40,000 100% 40,000 Ending Work in process 20,000 100% 20,000 75% 15,000 Equivalent Units of Production 60,000 60,000 55,000 Cost per Equivalent unit of production Materials Conversion Beginning WIP $0 $0 Cost added during the month $480,000 $550,000 Totals costs Costs $480,000 costs $550,000 Divided by equivalent units of production EUP 60,000 EUP 55,000 Cost per equivalent unit (rounded to 2 decimals) $8.00 $10.00 Total Costs to Account for: Beginning WIP $0 Costs added during the month $1,030,000 Total costs to account for $1,030,000 Total costs accounted for $1,030,000 Difference due to rounding off $0 Cost Assignment and Reconciliation: Cost of units completed and transferred out EUP Cost per EUP Total Cost Direct materials 40,000 $8.00 $320,000 Conversion 40,000 $10.00 $400,000 Total costs transferred out to Department 1 $720,000 Cost of ending work in process Direct materials 20,000 $8.00 $160,000 Conversion 15,000 $10.00 $150,000 Total cost of ending work in process $310,000 Total cost accounted for $1,030,000 100% 80% ABM Company Cost of Production Report - Department 2 Weighted Average Method % EUP- % EUP- % EUP Units Transferred Transferred Materials Materials Conversion Conversion in in Units completed and transferred 30,000 100% 30,000 100% 30,000 100% 30,000 Ending Work in process 10.000 10,000 50% 5,000 8,000 Equivalent Units of Production 40,000 40,000 35,000 38,000 Transferred Cost per Equivalent unit of production in Materials Conversion Beginning WIP $0 $0 $0 Cost added during the month $720,000 $245,000 $304,000 Totals costs Costs $720,000 $245,000 $304,000 Divided by equivalent units of production EUP 40,000 35,000 38,000 Cost per equivalent unit (rounded to 2 decimals) $18.00 $7.00 $8.00 Total Costs to Account for: Beginning WIP $0 Costs added during the month $1,269,000 Total costs to account for $1,269,000 Total costs accounted for $1,269,000 Difference due to rounding off $0 Cost Assignment and Reconciliation: Cost of units completed and transferred out EUP Cost per EUP Total Cost Transferred-in 30,000 $18.00 $540,000 Direct materials 30,000 $7.00 $210,000 Conversion 30,000 $240,000 Total costs transferred out $990,000 Cost of ending work in process Transferred-in 10,000 $18.00 $180,000 Direct materials 5,000 $7.00 $35,000 Conversion 8,000 $8.00 $64,000 Total cost of ending work in process $279,000 Total cost accounted for $1,269,000 $8.00