13/08/2008 20:29

# Cost of Production Report - Terminal Department (3rd - Final Department):

We recommend to see the cost of production report of the first and second department before you continue.

The cost of production report of 3rd and final department is illustrated below:

The Clonex Corporation
Terminal Department (3rd Dept.)
Cost of Production Report
For the Month of January, 19

 Quantity Schedule: Units received from the preceding department 40,000 ====== Units transferred to finished goods storeroom 35,000 Units still in process (1/4 labor and FOH) 4,000 Units lost in process 1,000 40,000 ====== Cost Charged To the Department: Total Cost unit Cost Cost from preceding department: Transferred in during the month \$140,400 \$3.51 Cost added by the department: Labor 32,400 0.90 Factory Overhead (FOH) 19,800 ------- 0.55 ----- Total cost added \$52,500 \$1.45 Adjusted for lost units 0.09* ------- ------ Total cost to be accounted for \$192,600 \$5.05 ====== ====== Cost Accounted for as Follows: Transferred to finished goods storeroom (35,000 × \$5.05) \$176,750 Work in process - ending inventory: Adjusted cost from preceding department [4,000 × (\$3.51 + \$0.09)] \$14,400 Labor (4,000 × 1/4 × \$0.90) 900 Factory Overhead (4,000 × 1/4 × \$0.55) 550 ------ 15,850 ------ Total cost accounted for \$192,600 ====== Additional Computations: Equivalent Production: Labor and factory overhead = 35,000 + 4,000 / 4 = 36,000 units Unit Costs: Labor = \$32,400 / 36,000 = \$0.90 per unit Factory overhead = \$19,800 / 36,000 = 0.55 per unit *Adjustment for lost units: Method No.1: \$140,400 / 39,000 = \$3.60; \$3.60 - \$3.51 = \$0.09 per unit Method No.2: 1,000 units × \$3.51 = \$3,510; \$3,510 / 39,000 = \$0.09 per unit

## Explanation:

Total and unit cost figures were derived by using procedures discussed for the cost of production report of the Testing Department. The work completed is transferred to the finished goods storeroom; thus, the title "Transferred to finished goods storeroom" is used in place of the title "Transferred to next department." Cost charged to the Terminal Department come from the payroll distribution and the department's expense analysis sheet. The journal entry transferring costs from the Testing Department follows:

Work in process - Terminal Department                            140,000
Work in process - Testing Department                            140,000

The entry to transfer finished units to the finished goods storeroom is presented below:

Finished Goods                                                           176,750
Work in process - Terminal Department                          176,750