Illustration: Cost of Production Report

Case 2. Manufacturing company with two or more processing departments, with beginning inventory, materials, labor and factory overhead are added or incurred as neeeded in the process.
Materials, labor and Factory overhead are in different stages of completion.

Prestige Plastic Corporation manufactures plastic utensils at its Quezon City factory. It has two departments: Forming Department and Finishing Department.
Forming Department produces in mass the utensils. The Finishing Department processes the formed utensils.
Data for the month of April, 2016 are as follows:

Departments
Forming Finishing
Units:
Work in process, beg. 300 540
Percentage of Completion: Materials 80% 40%
Labor 40% 20%
Factory Overhead 60% 20%
Started in process during the period 1,800
Completed and transferred out 1,500
Received from from Forming Department 1,500
Transferred to finished Goods inventory 1,740
Work in process, end: 600 300
Precentage of completion: Materials 60% 100%
Labor 20% 70%
Factory Overhead 40% 70%

Costs:
Work in process beginning
Cost from preceding department ₱1,248,000.00
Cost added: Materials ₱283,800.00 ₱124,500.00
Labor 60,000.00 71,250.00
Factory Overhead 119,400.00 77,700.00
Cost added during the current period:
Materials 2,041,200.00 1,094,400.00
Labor 750,000.00 1,381,500.00
Factory Overhead 1,185,600.00 1,657,800.00

1. Prepare Cost of Production Report for Forming Department using Weighted Average Method
2. Prepare Cost of Production Report for Finishing Department using FIFO Method.

Solution:
1. Cost of Production Report, Forming Department - Weighted Average Method.

Prestige Plastic Corporation

Forming Department
Cost of Production Report - Weighted Average Method
for the month ended April 30,2016
Quantity Schedule and Equivalent Units
Quantity Equivalent Units
Schedule Materials Labor Overhead
Units to be accounted for:
Work in process beginning 300
Added/Started in process this period 1,800
Total 2,100
Units accounted for:
Completed and transferred out to Finishing Dept. 1,500 1500 1500 1500
Work in process, end (M=60%;L=20%;FOH=40%) 600 360 120 240
Total 2,100 1,860 1,620 1,740

Total and Unit Costs:

Costs
Total Materials Labor Overhead
Cost to be accounted for:
Cost added by department:
Work in process, beginning ₱463,200.00 ₱283,800.00 ₱60,000.00 ₱119,400.00
Added/Started in process this period 3,976,800.00 2,041,200.00 750,000.00 1,185,600.00
Total cost to be accounted for ₱4,440,000.00 ₱2,325,000.00 ₱810,000.00 ₱1,305,000.00
Cost per equivalent unit: ₱2,500.00 ₱1,250.00 ₱500.00 ₱750.00

Cost accounted for:

Completed and transferred out to Finishing Dept.
(1,500 units x P2,500.00) ₱3,750,000.00
Work in process, end:
Materials (360 units x P1,250.00) 450,000.00
Labor (120 units x P500.00) 60,000.00
Factory Overhead (240 units x P750.00) 180,000.00
690,000.00
Total cost accounted for: ₱4,440,000.00

2. Cost of Production Report - Finishing Department - FIFO method

Prestige Plastic Corporation

Finishing Department
Cost of Production Report-FIFO Method
for the month ended April 30, 2016

Quantity Schedule and Equivalent Units:

Equivalent Units
Quantity Forming Dept. Finishing Dept.
Schedule Materials Materials Labor Overhead
Units to be accounted for:
Work in process, beginning (M-40%,L-20%), O-20%) 540
 Started this period/Received from Forming Dept. 1,500
Total units to be accounted for: 2,040
Units accounted for:
Completed and transferred out to finished goods inv,
Work in process, beg.(M-60%,L-80%,O-80%) 540 324 432 432
Started this period 1,200 1,200 1,200 1,200 1,200
Work in process, end (M-100%,L-70%,O-70% 300 300 300 210 210
Total units accounted for 2040 1,500 1824 1842 1842

Total and Unit Costs Costs

Forming Dept. Finishing Dept.
Total Materials Materials Labor Overhead
Cost to be accounted for:
Work in process, beg.
Cost from Forming Dept. ₱1,248,000.00
Added by Finishing Dept. 273,450.00
Cost added this period:
Cost from Forming Dept. 3,744,000.00 ₱3,744,000.00
Added by Finishing Dept. 4,133,700.00 ₱1,094,400.00 ₱1,381,500.00 ₱1,657,800.00
Total cost to be accounted for ₱9,399,150.00 ₱3,744,000.00 ₱1,094,400.00 ₱1,381,500.00 ₱1,657,800.00
Cost per equivalent unit: ₱4,746.00 ₱2,496.00 ₱600.00 ₱750.00 ₱900.00

Cost accounted for:

Completed and transferred to Finished Goods Inv.
From Work in process, beg.
Beginning cost ₱1,521,450.00
Cost to complete;
Materials (324 units x P600.00) 194,400.00
Labor (432 units x P750.00) 324,000.00
Overhead (432 units x P900.00) 388,800.00
907,200.00 ₱2,428,650.00

Started and completed this period (1,200 units x P4746.00) 5,695,200.00

Completed and transferred to Finished Goods Inv. 8,123,850.00
Work in process, end
Cost from Forming Dept. (300 units x P2,496.00) 748,800.00
Materials (300 units x P600.00) 180,000.00
Labor (210 units x P750.00) 157,500.00
Overhead (210 x P900.00) 189,000.00 1,275,300.00
Total cost accounted for: ₱9,399,150.00