MetalMex, Ltd., is engaged in the production and sales of two products for the automotive industry: product A and product B. The manufacturing process, which is identical for each of the products can be briefly described as follows:

• In an initial phase the direct materials are converted in the cost centre of Manufacturing (unit of work: Mh);

• After this, there is a process of manual improvement in the Finishing cost centre (unit of work: Lh) in order products become ready to sell to customers.

There are additionally two service cost centres: Cleaning (unit of work: Lh) and General Services, which allocates costs to the remaining cost centres in the following proportion: 30% for the Manufacturing, 60% for the Finishing and 10% for the Cleaning.

For the month of January, the company has available the following information:

1. Consumption of Direct Materials

2. Information on inventories:

• There are no stocks of work in progress
• Opening stocks of finished goods are zero
• The production of product A and product B were, respectively: 315 units and 2.125
• The COGM per unit of Product A is 25 .

3. Activity of Cost Centres

USERS	SUPPLIERS
Manufacturing	Finishing	Cleaning
Product A	1.375	1.000	-
Product B	3.000	525	-
Manufacturing	-	-	50
Finishing	-	-	10
General Services	-	-	40
TOTAL	4.375 Mh	1.525 Lh	100 Lh

4. Further information on cost centres:

• The cost of the work unit of the Manufacturing cost centre is 1.
• The direct costs of the production cost centres are:

5. Non-manufacturing costs in January:

6. Unit selling prices:

The company adopts total full costing and LIFO as the method of inventory valuation.

REQUIRED:

1. Prepare the map with the costs of the homogeneous cost pools.

1. Calculate the cost of goods manufactured (COGM) per unit of Product B;

Note: Consider that the cost of each unit of work of the Finish section is 6 .

1. Present the profit and loss account by function and by product knowing that the company sold the whole production of product A and 2.000 units of product B. Note: Consider that the cost of goods manufactured per unit of Product B is 5 .