Question 1

The MST Manufacturing Company produces one product that passes through a single process in a manufacturing cycle lasting approximately 18 days. Therefore, there will generally be some work-in-process inventories at the end of each month.

After MST started its manufacturing operations on 1 January, the costs of production for the rest of the month are given as follows:

 

Materials $41,412
Labor $32,054
Factory Overhead $24,552

The production statistics for the month were:

Units completed and transferred to finished goods store 6,500
Units in process (materials 40% and labor and overhead 25%) 1,600

Required: Prepare a statement showing the equivalent production quantity for the month in terms of materials, labor, and factory overhead. Also, prepare a cost of production report.

 

Solution

MTS Manufacturing Company
Cost of Production Report
For the month of January 20xx

Cost of Production Report for MST Manufacturing Company
Working

Equivalent  Production Quantity Formula

Question No. 2

The Tuttni Corporation manufactures one product that passes through two manufacturing departments. Production and manufacturing costs for the month of April were as follows:

Production and Manufacturing Costs at Tuttni Corporation
Required:
Using the process costing system, prepare a cost of production report for the month.

Solution

Tuttni Corporation
Cost of Production Report
For the Month of April 20xx

Cost of Production Report for Tuttni Corporation
Cost Accounted for at Departments A and B
W.I.P ending inventory:

Application of Formula for Tuttni Corporation Cost of Production Report

Computation

Equivalent/Effective production

Department I

Materials = 9,400 + 600 x 50/100 = 9,700 units
Labor = 9,400 + 600 x 50/100 = 9,700 units
FOH = 9,400 + 600 x 50/100 = 9,700 units

Department II

Materials = 9,400 + 0 = 9,400 units
Labor = 9,400 + 0 = 9,400 units
FOH = 9,400 + 0 = 9,400 units

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