The Starex Corporation

Terminal Department (3rd Dept.)

Cost of Production Report
For the Month of January, 2011
Quantity Schedule:

Units received from the preceding department

40,000
======
Units transferred to finished goods storeroom 35,000

Units still in process (1/4 labor and FOH) 4,000

Units lost in process 1,000 40,000
======
Cost Charged To the Department: Total
Cost
unit
Cost

Cost from preceding department:
Transferred in during the month P140,400 P3.51
Cost added by the department:
Labor 32,400 0.90
Factory Overhead (FOH) 19,800
-------
0.55
-----
Total cost added P52,500 P1.45
Adjusted for lost units 0.09*
------- ------
Total cost to be accounted for P192,600 P5.05
====== ======
Cost Accounted for as Follows:

Transferred to finished goods storeroom (35,000
P5.05)

P176,750
Work in process - ending inventory:
Adjusted cost from preceding department [4,000
(P3.51 + P0.09)]

P14,400

Labor (4,000 1/4 P0.90) 900
Factory Overhead (4,000 1/4 P0.55) 550
------
15,850
------
Total cost accounted for P192,600
======

Additional Computations:
Equivalent Production:
Labor and factory overhead = 35,000 + 4,000 / 4 = 36,000 units
Unit Costs:
Labor = P32,400 / 36,000 = P0.90 per unit
Factory overhead = P19,800 / 36,000 = 0.55 per unit
*Adjustment for lost units:
Method No.1: P140,400 / 39,000 = P3.60; P3.60 - P3.51 = P0.09 per unit
Method No.2: 1,000 units P3.51 = P3,510; P3,510 / 39,000 = P0.09 per unit
Explanation:
Total and unit cost figures were derived by using procedures discussed for the cost of
production report of the Testing Department. The work completed is transferred to
thefinished goods storeroom; thus, the title "Transferred to finished goods storeroom" is
used in place of the title "Transferred to next department." Cost charged to
the Terminal Departmentcome from the payroll distribution and the
department's expense analysis sheet. The journal entry transferring costs from the
Testing Department follows:
Work in process - Terminal Department 140,000
Work in process - Testing Department 140,000
The entry to transfer finished units to the finished goods storeroom is presented below:
Finished Goods 176,750
Work in process - Terminal Department 176,750

Combined Cost of Production Report (CPR) - Process Costing:
The three cost of production reports for the Starex Corpora have been discussed and
computed separately.
These reports would most likely be consolidated in a single report
summarizing manufacturing operations of the firm for a specific period. Such a report, as
illustrated below, should be reviewed in order to observe the interrelationship of the
various department reports.
The Starex Corporation
Cost of Production Report
All Producing Departments
For the Month of January, 2011
Quantity Schedule: Blending
1stDepartment
Testing
2ndDepartment
Terminal
3rdDepartment
Units started in process 50,000
======

Units received from the
preceding department

45,000
======
40,000
======
Units transferred to next department 45,000 40,000

Units transferred to finished goods
storeroom

35,000
Units still in process 4,000 3,000 4,000
Units lost in process 1,000
-------
2,000
-------
1,000
-------

50,000
======
45,000
======
40,000
======
Cost Charged To the Department: Total
Cost
unit
cost
Total
cost
unit
Cost
Total cost unit
Cost

Cost from preceding department:



Transferred in during the month

P77,400 P1.72 P140,400 P3.51

-------- ----- -------- -----
Cost added by the department:



Materials P24,500 P.50

Labor 29,140 .62 P37,310 P.91 P32,400 P.90
Factory Overhead (FOH) 28,200
-------
.60
----
32,800
-----
.80
----
19,800
-------
.55
----
Total cost added P81,840 P1.72 P70,110 P1.71 P52,200 P1.45
Adjusted for lost units

P.08

P.09
------- ---- ------- ----- -------- ----
Total cost to be accounted for P81,840 P1.72 P147,510 P3.51 P192,600 P5.05
====== === ====== === ====== ===
Cost Accounted for as Follows:

Transferred to next department P77,400 P140,400

Transferred to finished goods
storeroom (35,000 P5.05)

P176,750
Work in process - ending inventory:

Adjusted cost from
preceding department [4,000 (P3.51
+ P0.09)]



P5,400

P14,400
Materials P2,000

Labor (4,000 1/4 P0.90) 1,240 910 900
Factory Overhead (4,000 1/4
P0.55)
1,200
------
800
------
550
------

4,440
--------
7,110
------
15,850
--------
Total cost accounted for P81,840 P147,510 P192,600
====== ====== ======