Cost Accounting Assignment:

Given the following information, prepare a cost of production report for Department B for July. John Chemicals manufactures its products in two departments [A and B]. Data for Department B is listed below:

Units transferred from Department A...................................40,000

Per unit cost.........................................................................$3.20

Units transferred to finished goods......................................26,000

Units still in process [1/3 complete].......................................6000

Costs added by Department B:

Labor...............................................................................$31,500

Factory overhead..............................................................$23,100

All lost units are considered to be normal. Don't forget our per unit rounding rule.

Problem must be solved by the direction below:

There are four parts to the cost of production report.

The first part is the heading. Note that the heading is a four line heading that includes the department name. It is dated for a period of time.

The next part starts the body of the report. It is titled Quantity Schedule. The quantity schedule deals only with the amount of units, not dollar amounts. It accounts for the units that our department received and indicates their current location. Note the line entitled lost units. These units are considered to be lost normally. This is usually due to the manufacturing process itself, often caused by nature. Evaporation of some of our liquid output is a good example. Lost units are usually backed into. That is to say that any units we cannot account for are considered lost in process.

The third part is titled Cost Charged to Department. Its purpose is to account for the cost of all the goods in process or completed in our department. This is the dollar value both in total and per unit for the units that appear in the quantity schedule. It will also include amounts from previous departments if we are not the first department, since the reports are cumulative in nature.

The last portion of the report is titled Cost Accounted For As Follows. Its purpose is to prove the dollar totals in the previous section.