Cost of Production Report

Topics: Costs, Cost accounting, Cost Pages: 5 (1592 words) Published: January 19, 2013
Cost of Production Report - Blending Department (1st Department): Learning Objective:
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Blending Department (1st Dept.)
Cost of Production Report
For the Month of January, 19         Quantity Schedule:  
Units started in process 50,000
Units transferred to next department45,000 
Units still in process (all materials - 1/2 labor and FOH)4,000  Units lost in process1,000
Cost Charged To the Department:Total
Cost added by the department:
Factory Overhead (FOH)28,200
Total cost to be accounted for$81,840$1.72
Cost Accounted for as Follows:  
Transferred to next department (45,000 × $1.72) $77,400 Work in process - ending inventory:
Materials (4,000 × $0.50)$2,000
Labor (4,000 × 1/2 × $0.60)1,240
Factory Overhead (4,000 × 1/2 × $0.60)1,200
Total cost accounted for$81,840
Additional Computations
Equivalent Production:
Materials = 45,000 + 4,000 = 49,000 units
Labor and factory overhead = 45,000 + 4,000 / 2 = 47,000 units Unit Costs:
Materials = $24,500 / 49,000 = $0.50 per unit
Labor = $29,140 / 47,000 = $0.62 per unit
Factory overhead = $28,200 / 47,000 = 0.60 per unit
The quantity schedule of the cost report shows that Blending Department put 50,000 units in process, with units reported in terms of finished product. Finished units could be stated in pounds, feet, gallons, barrels, etc. If materials issued to a department are stated in pounds and finished product is reported in gallons, units in the quantity schedule will be in terms of the finished product, gallons. A product conversion table would be used to determine the number of units for which the department is accountable. The quantity schedule of the Blending Department’s report shows that of the 50,000 units for which the department was responsible, 45,000 units were transferred to the next department (), 4,000 units are still in process, and 1,000 units were lost in processing. Equivalent Production:

Costs charged to a department come from an analysis of  materials used, payroll distribution sheets, and department expense analysis sheets. The Blending Department’s unit cost amounts to $1.72 ( $0.50 for materials, $0.62 for labor, and $0.60 for factory overhead). Calculations of individual unit costs requires an analysis of the ending work in process to determine its stage of completion. This analysis is usually made by a supervisor or is the result of using predetermined formula. Materials, labor, and factory overhead have been used on the 4,000 units in the process but not in an amount sufficient for completion. To assign costs equitably to in process inventory and transferred units,...
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