Activity 8
Summer 2021
Cost Accounting and Control
Problem 1: Preparation of Cost of Production Report - Method of Neglect
The third department in the production of Narra Company is the Finishing Department. Data for the
month of April 2014 are given below:
Costs
Beginning Work in Process:
Transferred In Costs from Prior Department
Costs in Current Department
Materials
Labor
Overhead
Total Work in Process
Cost Incurred in April:
Materials
Labor
Overhead
Transferred in Costs from Prior Department
Quantities
Beginning Work in Process in Finishing Department
Transferred In from Prior Department
Transferred Out to Finished Goods Inventory
Normal Lost Units
Abnormal Lost Units
Ending Work in Process
Stage of Completion of Work in Process
Beginning
Materials
100%
Labor
50%
Overhead
50%
₱ 24,200.00
12,200.00
4,420.00
2,300.00
₱ 43,120.00
₱ 127,450.00
100,460.00
50,140.00
203,800.00
500
5,300
5,200
100
50
450
Ending
100%
60%
60%
Spoilage is discovered at the time of Final inspection of the units as they leave the department and
transferred to finished goods. It is therefore assumed that the units have been fully processed in the
Finishing Department. Normal spoilage is ignored in the computation of equivalent units of production.
Required:
1. Prepare a cost of production report using under weighted average method (round-off cost per
EUP to two (2) decimal places and adjust the rounding-off difference to transferred out cost, if
any)
2. Prepare a cost of production report under FIFO method (round-off current cost per EUP to two
(2) decimal places and adjust the rounding-off difference to transferred out cost, if any)
Problem 2: Preparation of Cost of Production Report – Normal Spoilage is Accounted for Separately
The third department in the production of Narra Company is the Finishing Department. Data for the
month of April 2014 are given below:
Costs
Beginning Work in Process:
Transferred In Costs from Prior Department
Costs in Current Department
Materials
Labor
Overhead
Total Work in Process
Cost Incurred in April:
Materials
Labor
Overhead
Transferred in Costs from Prior Department
Quantities
Beginning Work in Process in Finishing Department
Transferred In from Prior Department
Transferred Out to Finished Goods Inventory
Normal Lost Units
Abnormal Lost Units
Ending Work in Process
Stage of Completion of Work in Process
Beginning
Materials
100%
Labor
50%
Overhead
50%
₱ 24,200.00
12,200.00
4,420.00
2,300.00
₱ 43,120.00
₱ 127,450.00
100,460.00
50,140.00
203,800.00
500
5,300
5,200
100
50
450
Ending
100%
60%
60%
Spoilage is discovered at the time of Final inspection of the units as they leave the department and
transferred to finished goods. It is therefore assumed that the units have been fully processed in the
Finishing Department. The cost of normal spoiled units is absorbed by the units completed and
transferred out.
Required:
1. Prepare a cost of production report using under weighted average method (round-off cost per
EUP to two (2) decimal places and adjust the rounding-off difference to transferred out cost, if
any)
2. Prepare a cost of production report under FIFO method (round-off current cost per EUP to two
(2) decimal places and adjust the rounding-off difference to transferred out cost, if any)
Problem 3: Preparation of Cost of Production Report when there is an Increase in Units
Chico Company uses process cost accounting system. The data given below are for the Mixing
Department, the second department in the manufacturing process, for March 2014. Because material is
added in this department, the number of units increased during production.
Costs
Beginning Work in Process:
Transferred In Costs from Prior Department
Costs in Current Department
Materials
Labor
Overhead
Total Work in Process
Cost Incurred in March:
Materials
Labor
Overhead
Transferred in Costs from Prior Department
Quantities
Beginning Work in Process in Mixing Department
Transferred In from Prior Department
Transferred Out to Next Department
Ending Work in Process
Stage of Completion of Work in Process
Materials
Labor
Overhead
Beginning
66 2/3% or 2/3
70%
70%
₱ 10,800.00
3,142.00
2,013.00
1,812.00
₱ 17,767.00
₱ 80,000.00
66,000.00
56,000.00
214,200.00
150
2,550
2,900
100
Ending
80%
70%
80%
Required:
1. Prepare a cost of production report using under weighted average method (round-off cost per
EUP to two (2) decimal places and adjust the rounding-off difference to transferred out cost, if
any)
2. Prepare a cost of production report under FIFO method (round-off current cost per EUP to two
(2) decimal places and adjust the rounding-off difference to transferred out cost, if any)