P 6-4

(Appendix) cost of producction report and journal entreis : Avarge cost.

Jetter Engine Corporation manufactures a single model of gasoline engine
used in lawn mow ers, portable generators, and pumps. The basic engine block
is cast from steel machined in the Casting Department. Then it is transferred to
the Assembly Department, where the crank shaft, valves, pistons, and other
component parts are added. After Assembly, it is transferred to the Finishing
Department where the engine is tested. The company uses a process cost system
with an average cost flow assumption. Data related to February operations are:

Castinng Assembly
Units beginning inventory 500 1,000
Units started in process this period 3,000
Units received from precending department 2,700
Units transferred out department this period 2,700 2,900
Units in ending inventory 800 800
Stage of completion with respect to materials 100% 70%
Stage of completion with respect to labor 80% 30%
Stage of completion with respect to overhead 90% 30%

Cost in beginning inventory:

Cost from preceding department 22,600
materials 43,700 161,032
labor 1,352 49,704
Factory overhead 11,356 49,704

Cost added during the curent period:

Materials 586,300 456,920
Labor 65,448 177,632
Factory overhead 193,844 177,632

Required:
1. Prepare cost of production report for each department for febuary
2. Assuming a separate work in process account is maintained for each producing
department, prepare the appropriate general journal entries to record the
charge to the producing departments for the costs incurred during February
and to record the transfer of units from Casting to Assembly, from Assembly to
Finishing, and from Finishing to Finished Goods Inventory.

JAWAB
1. Jetter Engine Corporation
Casting Department
Cost of Production Report For Febuary

Materials Labor Overhead

Beginning inventory
Started in process this period

Tranferred to Assembly Department

Ending inventory 100% 80% 90%

Cost Charged to Department Total Cost

Beginning inventory:
Materials 43,700
Labor 1,352
Factory Overhead 11,356
Total Cost in beginning Inventory 56,408
Cost Added During the curent period:
Materials 586,300
Labor 65,448
Factory Overhead 193,844
Total Cost added during curent period 845,592
Total Cost Charged to Department 902,000

Cost Accounted for as Follow Units Complete Equivalents Units

Transferred to Assembly Department 2,700 100% 2,700
Work In Process, ending inventory:
Materials 800 100% 800
Labor 800 80% 640
Factory Overhead 800 90% 720

Jetter Engine Corporation

Assembly Department
Cost of Production Report For Febuary

Materials Labor Overhead

Beginning inventory
Received from casting department

Tranferred to Finishing Department

Ending inventory 70% 30% 30%

Cost Charged to Department Total Cost

Beginning inventory:
 Cost from preceding department 252,600
Materials 161,032
Labor 49,704
Factory Overhead 49,704
Total Cost in beginning Inventory 513,040
Cost Added During the curent period:
Cost from preceding department 702,000
Materials 465,920
Labor 177,632
Factory Overhead 177,632
Total Cost added during curent period 1,523,184
Total Cost Charged to Department 2,036,224

Cost Accounted for as Follow Units Complete Equivalents Units

Transferred to finishing department 2,900 100% 2900
Work In Process, ending inventory:
Cost from precending department 800 100% 800
Materials 800 70% 560
Labor 800 30% 240
Factory Overhead 800 30% 240

Jetter Engine Corporation

Finishing Department
Cost of Production Report For Febuary

Labor Overhead
Beginning inventory
Received from assembly department

Tranferred to Finished Goods

Ending inventory 50% 50%

Cost Charged to Department Total Cost

Beginning inventory:
Cost from preceding department 171,360
Labor 11,040
Factory Overhead 16,560
Total Cost in beginning Inventory 198,960
Cost Added During the curent period:
Cost from preceding department 1,693,600
 Materials -
Labor 48,960
Factory Overhead 53,440
Total Cost added during curent period 1,796,000
Total Cost Charged to Department 1,994,960

Cost Accounted for as Follow Units Complete Equivalents Units

Transferred for finished goods 2,800 100% 2800
Work In Process, ending inventory:
Cost from precending department 400 100% 400
Labor 400 50% 200
Factory Overhead 400 50% 200

2) Account Title Debit Kredit

WIP - Casting department 586,300
WIP - Assembly department 465,920
Materials 1,052,220

WIP - Casting department 65,448

WIP - Assembly department 177,632
WIP - Finishing department 48,960
Payroll 292,040

WIP - Casting department 193,844

WIP - Assembly department 177,632
WIP - Finishing department 53,440
Applied factory Overhead 424,916

WIP - Assembly dapartment 702,000

WIP - Casting department 702,000

WIP - Finishing department 1,693,600

WIP - Assembly dapartment 1,693,600

Finished Goods inventory 1,753,173.3

WIP - Finishing department 1,753,173.3
 Finishing
300

2,900
2,800
400

50%
50%

171,360

11,040
16,560

48,960
53,440

on

r Febuary

Quantity
 500
3,000
3,500
2,700
800
3,500

Equivalent Units Unit Cost

Materials
3,500 180 Equivalent units transferred out 2,700
3,340 20 Equivalent units in ending inventory 800
3,420 60 Total equivalent units 3,500
Materials
260 Cost in beginning inventory 43,700
Cost added during curent period 586,300
Unit Cost Total Cost Total cost to be account for 630,000
260 702,000 Divided by total equivalent units 3,500
Cost per equivalent units 180
180 144,000
20 12,800
60 43,200 200,000
902,000

on
nt
r Febuary

Quantity
1,000
2,700
3,700
2,900
800
3,700

Equivalent Units Unit Cost

 Equivalent units transferred out
Equivalent units in ending inventory
Total equivalent units

3,700 258
3,460 181.2 Cost in beginning inventory
3,140 72.4 Cost added during curent period
3,140 72.4 Total cost to be account for
Divided by total equivalent units
584 Cost per equivalent units

Unit Cost Total Cost

584 1,693,600

258 206,400
181.2 101,472
72.4 17,376
72.4 17,376 342,624
2,036,224

on
t
r Febuary

Quantity
300
2,900
3,200
2,800
400
3,200

Equivalent Units Unit Cost

Equivalent units transferred out

3,200 582.8 Equivalent units in ending inventory
 - Total equivalent units
3,000 20
3,000 23.3
Cost in beginning inventory
626.1 Cost added during curent period
Total cost to be account for
Unit Cost Total Cost Divided by total equivalent units
626.1 1,753,173.3 Cost per equivalent units

582.8 233,120
20 4,000
23.3 4,667 241,786.7
1,994,960
Labor FO
2,700 2,700
640 720
3,340 3,420
Labor FO
1,352 11,356
65,448 193,844
66,800 205,200
3,340 3,420
20 60
From Precending Department Materials Labor Overhead
2,900 2,900 2,900 2,900
800 560 240 240
3,700 3,460 3,140 3,140
From Precending Department Materials Labor Overhead

252,600 161,032 49,704 49,704

702,000 465,920 177,632 177,632
954,600 626,952 227,336 227,336
3,700 3,460 3,140 3,140
258 181.2 72.4 72.4

From Precending Department Labor Overhead

2,800 2,800 2,800
400 200 200
 3,200 3,000 3,000
From Precending Department Labor Overhead

171,360 11,040 16,560

1,693,600 48,960 53,440
1,864,960 60,000 70,000
3,200 3,000 3,000
582.8 20 23.3
P6-5
Hi- Tech Chemical Corporation produces aircraft fuel in a two- step process. Unrefined gasoline is purchased from
a major oil company and refined in the Refining Department. The refined gasoline is then transferred to the
Blending Department, where cleansers and other additives are mixed with the refined gasoline. The chemicals
added in the Blending Department increase the total volume of fuel. The company uses a process cost system
with an average cost flow assumption and it maintains a separate work in process account for each of its
two production departmens. Data related to operations for March are :
Refining
Units in beginning inventory 800
Units started in process in Refining
Departmen this period 7,200
Units transferred from Refining to Blending this period 7,000
Units added to process in Blending
Departmen this period
Units transferred from blending to
Finished Goods this period
Units in ending invetory :
Refining (100% materials, 75% labor, and 50% overhead ) 1,000
Blending (80% materials, 40% labor, and 40% overhead)

Cost in beginning inventory: Refining

Cost from preceding dept
Materials 2,912
Labor 120
Factory overhead 240

Cost added during current period Refining

Materials 29,088
Labor 6,080
Factory overhead 11,760

Required :
(1) Prepare a cost of production report for each departmen for March
(2) Prepare the appropriate general journal entries to record the charge to the producing departments for the costs incurred during M
Answer :
(1) Hi-Tech Chemical Corporation
Refining Department
Cost of production report
March
Quantity Schedule : Materials
Beginning Inventory
Started in process this period

Transferred to Blending Department

Ending Inventory 100%
Cost Charged to Department
Beginning Inventory

Materials
Labor
Factory Overhead
Total cost in beginning inventory
Cost added during current period:
Materials
Labor
Factory Overhead
Total cost added during curent period
Total cost charged to department

Cost Accounted for as Follows Units

Transferred to Blending Department 7,000

Work in Process, ending inventory:
Materials 1,000
Labor 1,000
Factory overhead 1,000

Hi-Tech Chemical Corporation

Blending Department
Cost of production report
March
Quantity Schedule : Materials
Beginning Inventory
Received from Refining Departmen
Added to process in Blending Department

Transferred to Finished Goods

Ending inventory 80%

Cost Charged to Department

Beginning Inventory

Cost from preceding department

Materials
Labor
Factory Overhead
Total cost in beginning inventory
Cost added during current period:
 Cost from preceding department
Materials
Labor
Factory Overhead
Total cost added during curent period
Total cost charged to department

Cost Accounted for as Follows Units

Transferred of Finish Good 9,200

Work in Process, ending inventory:
Cost from preceding department 1,000
Materials 1,000
Labor 1,000
Factory overhead 1,000

2) Account title Debit

Work in process - Refining Department 29,088
Work in process - Blending Department 17,520
Materials

Work in process - Refining Department 6,080

Work in process - Blending Department 12,400
Payroll

Work in process - Refining Department 11,760

Work in process - Blending Department 22,400
Applied Factory Overhead

Work in process - Blending Department 44,800

Work in process - Refining Department

Finished Goods Inventory 99,360

Work in process - Blending Department
 soline is purchased from
transferred to the
soline. The chemicals
process cost system
nt for each of its

Blending
1,400

7,000

1,800

9,200

1,000

Blending
7,016
2,480
272
640

Blending
17,520
12,400
22,400

ments for the costs incurred during March and to record the transfer of units from refining to blending and from blending to Finished Goods inventory

-Tech Chemical Corporation

Refining Department
Cost of production report
March
Labor Overhead Quantity
800
7,200
8,000
7,000
75% 50% 1,000
8,000
 Total Equivalent Units
Cost Units Cost
2,912
120
240
3,272

29,088 8,000 4
6,080 7,750 1
11,760 7,500 2
46,928
50,200 6

Complete Units Equivalent Total

Cost Units Cost
100% 6 44,800

100% 4 4000
75% 1 600
50% 2 800 5400
50,200

-Tech Chemical Corporation

Blending Department
Cost of production report
March
Labor Overhead Quantity
1,400
7,000
1,800
10,200
9,200
40% 40% 1,000
10,200

Total Equivalent Units

Cost Units Cost
7,016
2,480
272
640
10,408
 44,800 10,200 5.08
17,520 10,000 2
12,400 9,600 1.32
22,400 9,600 2.4
97,120
107,528 11

Complete Units Equivalent Total

Cost Units Cost
100% 11 99,360

100% 5.08 5,080

80% 2 1,600
40% 1.32 528
40% 2.4 960 8,168
107,528

Kredit

46,608

18,480

34,160

44,800

99,360
ng to Finished Goods inventory
*Total number of equivalent units required in the cost accounted for section determined as follows:
Materials Labor Factory Overhead
Equivalent units transferred out 7,000 7,000 7,000
Equivalent units in ending inventory 1,000 750 500
Total equivalent units 8,000 7,750 7,500
*Total number of equivalent units required in the cost accounted for section determined as follows:
Materials Labor Factory Overhead
Equivalent units transferred out 9,200 9200 9200
Equivalent units in ending inventory 800 400 400
Total equivalent units 10,000 9,600 9,600