Question

Peaceful Ltd. manufactures a single product, which passes through the Forming Department and Packing Department.

Manufacturing begins in the Forming Department. All units are then transferred to Packing Department.

In the Packing Department, further materials are added and processed until completion, and transferred to the finished goods inventory. Overhead is allocated on the basis of 140% of direct labour cost.

Work in process in the Packing Department on 1 Aug was 90,000 units (Materials : 40% complete; Conversion : 60% complete). The costs included in these units were as follows :

Forming Department costs $1,395,000

Packing Department : Direct materials : $396,000

Direct labour : $1,192,500

Overheads： $?

During the month, the Packing Department completed and transferred 180,000 units to finished goods inventory. Units transferred in from Forming in Aug were charged at $21.50 per unit. Packing Department's costs in Aug were :

Materials added during the month $1,875,000

Direct labour for the month $3,392,500

Overheads $?

The ending work in process for Packing Department was 30,000 units (Materials : 20%; Conversion : 40%).

Required :

(a) Prepare the Packing Department production cost report for the month of Aug 2020 using (round up to 2 decimal place) : (i) Weighted Average method (ii) FIFO method

Answer 1

Production cost report-Packing Deptt for Aug 2020
(Weighted Average Method)
	Physical units	Transferred in	DM cost	Conver. Cost	Total
WIP Op	90000	90000	90000	90000
Started & Compl. Units	90000	90000	90000	90000
Transf. out to FG	180000
WIP Cl	30000	30000	6000	12000
Equivalent units		210000	186000	192000
Total costs:
WIP Op		1395000	396000	2862000			(1192500*240%)
Incurred during Aug		2580000	1875000	8142000		(120000*21.5)	(3392500*240%)
Total costs to account for		3975000	2271000	11004000	17250000
Cost per Eq. unit		18.92857143	12.20967742	57.3125
Cost of Transf. to FG		3407143	2197742	10316250	15921135
Cost of WIP Cl		567857	73258	687750	1328865
Total costs accounted for					17250000
Production cost report-Packing Deptt for Aug 2020
(FIFO Method)
	Physical units	Transferred in	DM cost	Conver. Cost	Total
WIP Op	90000		54000	36000	4653000
Started & Compl. Units	90000	90000	90000	90000
Transf. out to FG	180000
WIP Cl	30000	30000	6000	12000
Equivalent units		120000	150000	138000
Incurred during Aug		2580000	1875000	8142000	12597000	(120000*21.5)	(3392500*240%)
Cost per Eq. unit		21.5	12.5	59
Total costs to account for					17250000
Total cost of WIP Op:
WIP Op		1395000	396000	2862000	4653000		(1192500*240%)
Added during Aug			675000	2124000	2799000
Total cost of WIP Op:		1395000	1071000	4986000	7452000
Cost of Started & Comp.		1935000	1125000	5310000	8370000
Cost of Transf. out to FG		3330000	2196000	10296000	15822000
Cost of WIP Cl		645000	75000	708000	1428000
Total costs accounted for					17250000