You are the production supervisor of the Inspection Department of a lumber processing plant. The cost department collected following figures for department 2: Required: A cost of production report for department 2 for December. A company’s Department 2 costs for June were: The quantity schedule shows 12,000 units were received during the month from Department 1; 7,000 units were transferred to finished goods; and 5,000 units in process at the end of June were 50% complete as to materials cost and 25% complete as to conversion cost. Calculate equivalent units of production. (25% X $10,500,000 = $2,625,000). I really understood the explanations given, Your email address will not be published. During April, 20,000 units were transferred in from department A at a cost of $39,000. Also see formula of gross margin ratio method with financial analysis, balance sheet and income statement analysis tutorials for free download on Accounting4Management.com. Materials cost of $6,500 and conversion cost of $9,000 were added in department B. Materials are added at the end of the process, following inspection. Department 2 Costs added in the Assembly department were: materials, $41,650; labor, $101,700; and factory overhead. The entire loss is considered abnormal and is to be charged to factory overhead. Required fields are marked *. Pietra – Gonatas, Inc. uses process costing to account for the costs of its only product, product D. Production takes place in three departments; Fabrication, Assembly, and Packaging. Normal spoilage is expected to be 5% of good output. View 2_Exercises_Job_order_costing_with_solution.pdf from AA 1Ágnes Siklósi PhD Managerial Accounting Job-Order Costing Seminar 2 True/False Questions 1. Assembly department: 1,000 units, 2/5 complete as to direct labor. For the Month of June, 19___, Materials = 7,000 + (5,000 × 50%) = 9,500 units, Labor and factory overhead = 7,000 + (5,000 × 25%) = 8,250 units. The cost per equivalent unit for conversion costs. On April 30, department B had 5,000 units of work in process 60% complete as to conversion as costs. Exercise 2: Preparation of quantity schedule in process costing Exercise 3: Quantity schedule and equivalent units Exercise 4: Cost per equivalent unit – weighted average and FIFO method Labor and factory overhead = 9,000 + (2,000 × 70%) + 450 + 550, Materials = $18,000 / 9,000 = $2.00 per unit, Labor and factory overhead = $45,600 / 11,400 = $4.00 per unit. Department 2 Copyright 2012 - 2020. Carola Chemical Inc. For the Month of December. View Process Costing Practice Exercise Solution.xlsm from ACCY 202 at University of Mississippi. Normal spoilage is expected to be 5 % of good output. For December, the Production Control Department of Carola Chemical, Inc., reported the following production data for Department 2: All materials were put into process in Department 1. Labor and factory overhead = 25,000 + (42,00 × 50%) + (750 × 96%)  + (50 ×  96%), Materials = $12,500 / 25,000 = $.50 per unit, Labor and factory overhead = $139,340 / 27,888 = $5.00 per unit. Cost of production report ;normal spoilage .malamud company uses process costing .all material are added at the beginning of the process .the product is inspected when it is 80% converted ,and spoilage is identified only at that point. What is the treatment of normal and abnormal loss in process costing system? Also learn latest Accounting & management software technology with tips and tricks. Of Prepare the format of cost of production report. Required: The cost of production report for Department 2 for April. The T account for Work in Process in the Solutions carries an opening balance of $20,000.00, but the balance given in the actual question is $15,000. Your email address will not be published. In department B, conversion costs are incurred uniformly throughout the process. Packaging department: 100 units, 3/4 complete as to packaging materials and 1/4 complete as to direct labor. The number of equivalent units of raw materials in all inventories at June 30. Cost of Production Report Department 2 $56,500. The costs for Department 2 for April were: The degree of completion of the work in process as to costs originating in department 2 was: 50% of units were 40% complete; 20% were 30% complete; and the balance were 20% complete. A spoilage rate of 3% of good  output is considered normal.