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    PROCESS-COSTING-NATURE-AND-OPERATIONS-ILLUSTRATION

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    Lanlan 2000

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    PROCESS-COSTING-NATURE-AND-OPERATIONS-ILLUSTRATION

    Uploaded by

    Lanlan 2000
    1 views2 pages

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    © © All Rights Reserved

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    1 views2 pages

    PROCESS-COSTING-NATURE-AND-OPERATIONS-ILLUSTRATION

    Uploaded by

    Lanlan 2000

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    PROCESS COSTING – NATURE AND OPERATIONS

    PROBLEM 1. BBM Company uses two departments to produce a product. The following data were taken from the
    books for the month of January, 2022.
    Department 1 Department 2
    Units:
    Started 60,000
    Completed and transferred 40,000 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.

    PROBLEM 2. The Camilia Soap Corporation requires three processing departments to produce its soap. All direct
    materials are introduced into production at the beginning of Department 1. Departments 1 through 3 add
    conversion costs evenly throughout the process.

    A cost accountant obtained the following information for December 2021.


    Departments
    1 2 3
    Units started in process 150,000
    Units transferred to the next department 125,000 115,000
    Units transferred to finished goods 112,000
    Ending units in process - % of completion for conversion costs 40% 10% 90%
    Costs added by department:
    Direct materials P21,000
    Direct labor 8,100 P11,600 P8,029
    factory overhead (applied) 16,200 23,200 16,058

    Required: Prepare a cost of production report for each department.

    PROBLEM 3. The departmental heads of Phoenix Factories, Inc., have submitted the monthly production reports for
    June 2021. These reports have been summarized as follows:
    Trimming Dept. Assembly Dept. Finishing Dept.
    Quantity:
    Started in process 6,000 0 0
    Transferred in 0 5,400 5,000
    Transferred out 5,400 5,000 4,800
    Work in process – end 600 400 200

    Stage of Completion of WIP – End:


    Materials Complete 95% 80%
    Labor 60% 75% 90%
    Overhead 60% 85% 80%
    Costs are allocated as follows:
    Allocation Materials Labor Overhead
    Trimming Dept. P33,600 P18,500 P9,217
    Assembly Dept. 14,840 14,840 7,120
    Finishing Dept. 6,400 10,320 4,960

    Required:
    1. Prepare the cost of production report. Round total costs to the nearest peso.
    2. Prepare journal entries to record the following:
    a. to charge materials, labor, and overhead to production.
    b. to record the transfer of goods from the Trimming Department to the Assembly Department.
    c. to record the transfer of goods from the Assembly Department to the Finishing Department.
    d. to record the completion of goods and their transfer to Finished Goods.

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