Average and FIFO cost methods; losses at the beginning and end of processing}

Similar to Self-Study Problem 1 Mt. Orab Manufacturing Company uses a process cost system. Its manufacturing operation is carried on in two departments: Machining and Finishing. The Machining Department uses the average cost method and the Finishing Department uses the FIFO cost method. Materials are added in both departments at the beginning of operations, but the added materials do not increase the number of units being processed. Units are lost in the Machining Department throughout the production process, and inspection occurs at the end of the process. The lost units have no scrap value and are considered to be a normal loss.

Production statistics for July show the following data:

{Required:}
Prepare a cost of production summary for each department. (Round to three decimal places.)

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Units in process, July 1 (all material, 40% of labor and overhead) Units in process, July 1 (all material, 80% of labor and overhead) Machining Units started in production Units completed and transferred Units transferred from Machining. Units completed and transferred to finished goods Units in process, July 31 (all material, 60% of labor and overhead)...... Units in process, July 31 (all material, 40% of labor and overhead) Units lost in production Production Costs Work in process, July 1: Finishing 20,000 40,000 140,000 100,000 -100,000 100,000 40,000 40,000 20,000 Machining Finishing Materials $40,000 $110,000 Labor 24,000 60,000 Factory overhead 8,000 40,000 Costs in Machining Department 240,000 Costs incurred during month: Materials Labor Factory overhead 280,000 240,000 180,000 160,000 60,000 80,000