ACTIVITY

ABC Industries has two departments. Department 1 uses FIFO costing and Department 2 uses weighted
average.

Units are introduced into the process in Department 1 (this is the only material added in Department 1).
Spoilage occurs continuously through the department and normal spoilage should not exceed 10 percent
of the units started.

Department 2 adds material (packaging) at the 75 percent completion point; this material does not cause
an increase in the number of units being processed. A quality control inspection takes place at the end of
the process. Spoilage should not exceed 5 percent of the units transferred in from Department 1.

The following production cost data are applicable for operations for August 20X7:

Department 1 Production Data

Beginning inventory (65% complete) 1,000
Units started 25,000
Units completed 22,000
Units in ending inventory (40% complete) 2,800

Department 1 Cost Data

Beginning inventory:
Material P 1,550
Conversion  2,300 P  3,850 
Current period:
Material P38,080
Conversion 78,645 116,725 
Total costs to account for P120,575 

Department 2 Production Data

Beginning inventory (90% complete) 8,000
Units transferred in 22,000
Units completed 24,000
Units in ending inventory (20% complete) 4,500
Department 2 Cost Data
Beginning inventory:
Transferred in P40,800
Material 24,000
Conversion  4,320 P 69,120*
Current period:
Transferred in ?
Material` 53,775
Conversion  11,079 178,554 
Total costs to account for P247,674 

Required:
Prepare the cost of production report for each department