(Appendix) Production Shrinkage in a Process Cost System with a Fifo Cost Flow Assumption. Local Pop Inc. uses a process cost system with fifo cost flow assumption to account for the production of its only prod¬ uct. The product is manufactured in three departments. Most of the required ingredients for flavoring are added and mixed in the Mixing Department. Next, the mixture is transferred to the Cooking Department, where more ingredients are added at various stages of the cooking process. Finally, the syrup is transferred to the Bottling Department, where the product is completed. Because of the heat applied in the Cooking Department, some of the production volume is lost to evaporation.

During December, 40,000 units were transferred from Mixing to Cooking, and 37,000 units were trans¬ ferred from Cooking to Bottling. The Cooking Department had 10,000 units still in process (75% complete as to materials and 25% complete as to conversion cost) at the end of November and 8,000 units still in process at the end of December (complete as to materials but only 75% complete as to conversion cost). Cost data related to December operations in the Cooking Department are: LO6 Cost from preceding department Materials.

Labor.

Factory overhead.

Beginning Inventory Added This Period

$2,920

$10,850 305 1,500 140 2,430 210 3,645 Required:

(1) Prepare a cost of production report for the Cooking Department based on the data presented for December.

(2) Prepare the appropriate general journal entry to record the transfer of cost out of the Cooking Department this period.