Illustration: Cost of Production Report.

Case 1. Manufacturing company with only one(1) processing department; with befinning
beginning
inventory:materials
inventory;materials
added
added
at the
at the
beginning
beginning
of the
of the
process.
process
Kimberly Mfg. Corporation manufactures peanut butter in a single department . Data for the month of March, 2016 are as follows:
Units:
Work in process, beginning
Materials, 100% complete, conversion cost, 80% complete 200 units
Started in process during the period 2,000 units
Completed and transferred out 2,080 units
Work in process, end
Materials, 100% complete, conversion cost, 50% complete 120 units
Cost:
Work in process, beginning
Materials, 100 % complete ₱3,000.00
Conversion cost, 80% complete 2,000.00 ₱5,000.00
Cost added during this period
Materials 30,000.00
Conversion cost 19,400.00
₱54,400.00

Required: 1. Prepare Cost of Production Report, Weighted average method and appropriate accounting entries.
2. Prepare Cost of Production Report, FIFO method and appropriate accounting entries.

SOLUTION:
1. Weighted Average Method
KIMBERLY MFG. CORPORATION Journal Entries:
Cost of Production Report - Weighted Average Method
for the month ended March 31,2016 1. Work in process ₱30,000.00
Materials ₱30,000.00
Quantity Schedule and Equivalent Units To record materials used
Quantity Equivalent units #
Schedule Materials Conversion 2. Work in process 19,400.00
Units to be accounted for: Various accounts 19,400.00
Work in process, beginning 200 To record conversion costs
Started in process during the period 2,000 #
Total units to be accounted for 2,200 3. Finished Goods Inventory 52,000.00
Units accounted for: Work in process 52,000.00
Completed and transferred out 2,080 2,080 2,080 To record cost of goods completed
Work in process, end (Materials, 100%; Conversion cost,50%) 120 120 60 and transferred to finished goods.
Total units accounted for 2,200 2,200 2,140 #

Total and Unit costs

Costs
 Total Materials Conversion
Cost to be accounted for:
Cost added by department:
Work in process, beginning ₱5,000.00 ₱3,000.00 ₱2,000.00
Added this period 49,400.00 30,000.00 19,400.00
Total cost to be accounted for ₱54,400.00 ₱33,000.00 ₱21,400.00
Cost per equivalent unit ₱25.00 ₱15.00 ₱10.00
Cost accounted for
Completed and transferred out (2,080 units x P25.00) ₱52,000.00
Work in process, end:
Materials ( 120 units x P15.00 ) ₱1,800.00
Conversion costs (60 units x P10.00) 600.00
2,400.00
Total cost accounted for ₱54,400.00

2. FIFO Mehtod
KIMBERLY MFG. CORPORATION Journal Entries:
Cost of Production Report - FIFO Method
for the month ended March 31,2016 1. Work in process ₱30,000.00
Materials ₱30,000.00
Quantity Schedule and Equivalent Units To record materials used.
Quantity Equivalent Units #
Schedule Materials Conversion 2. Work in process 19,400.00
Units to be accounted for Various accounts 19,400.00
Work in process, beginning 200 To record conversion costs
Started in process during the period 2,000 #
Total units to be accounted for 2,200 3. Finished Goods Inventory 52,012.00
Units accounted for; Work in process 52,012.00
Completed and transferred out; To record cost of goods completed
From work in process, beginning 200 40 and transferred to finished goods.
From started in process during the period 1,880.00 1880 1880
Work in process, end (Materials - 100%,Conversion -50%) 120 120 60
Total units accounted for 2,200 2,000 1980

Total and Unit Costs

Costs
Total Materials Conversion
Cost to be accounted for
Work in process, beginning ₱5,000.00
Cost added by department:
Added this period 49,400.00 ₱30,000.00 ₱19,400.00
 Total cost to be accounted for ₱54,400.00 ₱30,000.00 ₱19,400.00
Cost per equivalent unit ₱24.80 ₱15.00 ₱9.80
Cost accounted for:
Completed and transferred out:
From work in process, beginning:
Beginning cost ₱5,000.00
Cost to complete:
Conversion (40 units x P9.80) 392.00 ₱5,392.00
From started during the period (1,880 units x P24.80) 46,620.00
Total 52,012.00
Work in process, end:
Materials (120 units x P15.00) 1,800.00
Conversion costs (60 units x P9.80) 588.00 2,388.00
Total cost accounted for ₱54,400.00