5. Close the under or over-applied factory overhead assuming the balance is immaterial. Problem 2 (36 points) Asia, Inc., manufactures one product in two departments on a continuous basis and uses the average cost method of process cost accounting, Materials, labor, and overhead are added evenly throughout the process in both departments. The following information was reported for the month of August 2015. The Cost of Production Summary for the Cutting Department is provided below: Assembly Department $ 3,700 $ Production Costs Cutting Department Work in process, beginning of month: Cost in Cutting Department Materials $ 8,600 Labor 4,200 Factory overhead 3,500 $ 16,300 Costs incurred during month: Materials $61,400 Labor 26,425 Factory overhead 22,750 110, 575 Total $126, 875 585 1,600 1,000 3,185 $ 5,595 12,820 8,064 26,479 Production Report In process, beginning of month Finished and transferred during month Work in process, end of month Stage of completion Cutting Department 1,100 8,000 1,500 508 Assembly Department 600 8,000 600 408 $ 16,300 Asia, Inc. Cost of Production Summary--Cutting Department For the Month Ended August 31, 2015 Cost of work in process, beginning of month: Materials $ 8,600 Labor 4,200 Factory overhead 3,500 Cost of production for month: Materials $61,400 Labor 26,425 Factory overhead 22,750 Total costs to be accounted for Unit output for month: Finished and transferred to Assembly Department during month Equivalent units of work in process, end of month (1,500 units, 50% completed) 110,575 $126,875 8,000 750 8.750 Total equivalent production Unit cost for month: Materials (88,600 + $61,40078,750] Labor ($4,200 + $26,425)/8,750) Factory overhead [($3,500+ $22,750)/8,750) Total Inventory costs: Cost of goods finished and transferred to Assembly Department during month (8,000 $ 8.00 3.50 3.00 $14.50 $14.50) $116,000 Cost of work in process, end of month: Materials (1,500 x 50% x $8.00) Labor (1,500 x 50% x $3.50) Factory overhead (1.500 x 50% x $3.00) Total production costs accounted for $ 6,000 2,625 2,250 10,875 $126,875 Required: Complete the Cost of Production Summary for the Assembly Department for the month of August, 2015. Required: Complete the Cost of Production Summary for the Assembly Department for the month of August, 2015