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ASSIGNMENT NO.

7 (DEPARTMENTS B AND C ONLY)

INSTRUCTION: Prepare Cost of Production Report and required two (2) journal entries for each of the
two (2) departments, Dept. B and C. Round off all unit cost to five decimal places and all cost to the
nearest peso.

EDITION Corporation manufactures chocolate flavored milk for infant using three departments, Department A,
Department B and Department C.

The first step in the Department A is to add Material X. The Material X is then processed. Labor and Overhead
cost are assume to be incurred evenly throughout the process. At the end of the processing in this department
the goods are inspected then Material Y is added to the remaining good units. Completed units are then
transferred to the Department B.

The processing in this department requires the use of two different skills, Skill M and Skill N. The processing in
Department B will start the use of Skill N only after completing the application of Skill M that is after the
inspection point. Inspection occurs at 50% of production for Department B. Completed units from Department
B are then transferred to Department C.

Material Z is added in this department at the end of the production. Conversion cost is applied evenly.
Inspection occurs at 75% of the production. Normal loss units are expected at 2% of the units passing the
inspection point for all departments.

Overhead is applied at 125% of Direct Labor Cost for departments A and C.


Departments A and C use weighted average and department B uses FIFO method.
For the month of April the following data were made available:
Department A
Started IP, April 1, 2013 IP April 30, 2013 Lost Units
Actual Units 110,000 10,000 8,800 2,300
Cost
Material X 250,400 30,000
Material Y 268,730 45,500
Labor Cost 325,650 67,800
Stage of completion 25% 85%
Department B
Started IP, April 1, 2013 IP April 30, 2013 Lost Units
Actual Units ? 20,000 20,500 2,400
Cost
Preceding Department ? 34,600
Labor Cost
Skill M 150,200 16,500
Skill N 180,600 12,400
Overhead 413,500 36,125
Stage of completion 35% 40%
Department C
Started IP, April 1, 2013 IP April 30, 2013 Lost Units
Actual Units ? 8,400 10,500 2,200
Preceding department ? 33,500
Cost
Material Z 190,300 13,600
Labor 170,400 14,300
Stage of completion 50% 40%