1. Company's Department 2 costs for June were:

Cost from Department 1	$16,320
Cost added in Department 2:
Materials	43,415
Labor	56,100
Factory overhead (FOH)	58,575

The quantity schedule shows 12,000 units were received during the month from Department 1; 7,000 units were transferred to finished goods; and 5,000 units in process at the end of June were 50% complete as to materials cost and 25% complete as to conversion cost.

Required: Prepare Cost of production report.

b. Assuming all goods completed were sold, what do you think will be the effect on the cost of goods sold, net operating income, and employees performance evaluation if the accountant, acting on the request of the manager, altered (by increasing) the percentage of completion in the ending Work in Process inventory to achieve the target profit?