1. Cost & Management Accounting
Lecture-23
Main Ahmad Farhan

2. Example
Mini Soap Manufacturing unit providing following information
Units of opening work in process 200 units
Units put into the process units
Units completed and transfer out 1000 units
Units of opening work in process 100% completed as per direct material and 75% completed with direct labor
Cost incurred on opening work in process:
Direct Material Rs. 6,000
Direct Labor ,000
Factory overhead ,000
9,000
Cost incurred on units put in the process:
Direct Material Rs. 20,000
Direct Labor ,000
Factory overhead ,000
38,000
Required: Prepare cost of production report of process-1
47,000

3. Cost Of Production Report Department-1
I-Quantity Schedule:
Units of opening work in process 200
Units put in the process
1,000
Units completed and transfer out 1,000
II-Cost Accumulated in the Process:
Direct Material (6, ,000) 26,000
Direct Labor (2, ,000) 12,000
F.O.H (1, ,000) ,000
47,000

4. Cost Of Production Report Department-1
III-Calculation of Equivalent Units Produced (FIFO)
III-Calculation of Equivalent Units Produced (W. Avg method)
Material and Conversion cost = 1000 units
Material
Labor
FOH
Opening WIP
(200 x25%)
= 50
Completed units
800
Total
850

5. Cost Of Production Report Department-1
IV- Unit Cost (W. Avg) :
Direct Material : 26,000 / 1,000 = 26
Direct Labor : 12,000 / 1,000 = 12
F.O.H : 9,000 / 1,000 = 9
= 47

6. Cost Of Production Report Department-1
V- Cost Apportionment
Cost of units transferred to the next department:
x = 47,000

7. Cost Of Production Report Department-1
Per unit cost (W.Avg)
Per unit cost (FIFO)
Material
26,000 / 1000 = 26
20,000 / 800 = 25
Labor
12,000 / 1000 = 12
10,000 / 850 =
FOH
9,000 / 1000 = 9
8,600 / 850 =
Total 47

8. Cost Of Production Report Department-1
Accounting Treatment (FIFO) :
Cost of opening work in process
Cost already incurred on WIP Rs. 9000
Material 100% complete 0
Labor x 25 % = 50 x =
FOH x 25 % = 50 x =
10,059
Cost of completed units : 800 x ,947
47,000