cost of production report (Weighted Average & Normal Loss)

2. GROUP MEMBERS;GROUP MEMBERS;
1.1. Faizan Rasheed (14-arid-1703)Faizan Rasheed (14-arid-1703)
2.2. Abdul Rahim (14-arid-1687)Abdul Rahim (14-arid-1687)
3.3. Imran Javed (14-arid-1717)Imran Javed (14-arid-1717)
4.4. Imran Ali Khan (14-arid-1716)Imran Ali Khan (14-arid-1716)
5.5. Khurram Mushtaq (14-arid-1721)Khurram Mushtaq (14-arid-1721)

3. Manufacturing ProcessManufacturing Process
Costing System.Costing System.
Normal Loss & Average CostingNormal Loss & Average Costing
System.System.

4. Out Line.Out Line.
 Quantity Schedule.Quantity Schedule.
 Cost Charged To The Department.Cost Charged To The Department.
 Cost Account For As Fallows.Cost Account For As Fallows.
 Additional Computations.Additional Computations.
 Normal Loss In First Department.Normal Loss In First Department.
 Normal Loss In Second Department.Normal Loss In Second Department.
 Average costing System.Average costing System.

5. Quantity Schedule.Quantity Schedule.
 Provide information about manufacturingProvide information about manufacturing
activity.activity.
 Summarizes and displays the physicalSummarizes and displays the physical
flow of units produced through aflow of units produced through a
department.department.
 Provide information during an accountingProvide information during an accounting
period .period .

6. Cost charged to the department.Cost charged to the department.
 Provide information about cost material ,Provide information about cost material ,
labor & factory overhead.labor & factory overhead.
 Also provide information about unit costAlso provide information about unit cost
 Provide total cost during manufacturing.Provide total cost during manufacturing.

7. Cost accounted for as fallows.Cost accounted for as fallows.
 Provide information cost transferred toProvide information cost transferred to
next department.next department.
 Also provide information of closingAlso provide information of closing
inventories.inventories.

8. Additional computations.Additional computations.
 Equivalent production provide informationEquivalent production provide information
actual units produced.actual units produced.
 Provide information about actual cost ofProvide information about actual cost of
department.department.

9. Normal Loss in first departmentNormal Loss in first department
 There are no treatment of normal loss inThere are no treatment of normal loss in
first department.first department.
 Lost unit can be the cause of unit reducedLost unit can be the cause of unit reduced
but increase the cost.but increase the cost.

10. Normal loss in secondNormal loss in second
department.department.
 Normal loss have a treatment.Normal loss have a treatment.
 Adjustment for lost units in lost departmentAdjustment for lost units in lost department
and put cost in to cost charged to theand put cost in to cost charged to the
department head.department head.
 Cost of adjustment per unit cost addedCost of adjustment per unit cost added

11. Average costing system.Average costing system.
 Opening work in process inventoryOpening work in process inventory
merged with cost (new period).merged with cost (new period).
 Determined the Average p.u.c.Determined the Average p.u.c.

12. Production Data.Production Data.
 Units in process beginning….1000 (40% material,30% converted) costingUnits in process beginning….1000 (40% material,30% converted) costing
Rs.15665, Included cost from preceding department Rs. 4195;Rs.15665, Included cost from preceding department Rs. 4195;
Direct material…………………3553Direct material…………………3553
Direct labor…………………….5278 FOH………………………50% of DLDirect labor…………………….5278 FOH………………………50% of DL
 Units received from preceding department…………………….21000 &Units received from preceding department…………………….21000 &
cost of preceding department Rs 90405cost of preceding department Rs 90405
Direct Material …………...171380Direct Material …………...171380
Direct Labour……………..324800 FOH ……………………..50% of DLDirect Labour……………..324800 FOH ……………………..50% of DL
 Units completed & transferred out …………………………….20000 unitsUnits completed & transferred out …………………………….20000 units
units still in process …………………………………………….1500 unitsunits still in process …………………………………………….1500 units
( 60% Direct Material & 20% Converted)( 60% Direct Material & 20% Converted)

13. Solution.Solution.
Department NameDepartment Name
Cost Of Production ReportCost Of Production Report
for the month ended ..for the month ended ..
Weighted Average MethodWeighted Average Method
Quantity Schedule.Quantity Schedule.
Units in process beginning 1000Units in process beginning 1000
Units received from preceding depttUnits received from preceding deptt 2100021000 2200022000
Units complete & transferred out 20000Units complete & transferred out 20000
Units still in processUnits still in process
(60%DM & 20% converted) 1500(60%DM & 20% converted) 1500
Units lost in process at normalUnits lost in process at normal 500500 2200022000

14. Solution.Solution.
Cost charged to department.Cost charged to department. Total costTotal cost Unit costUnit cost
Cost from preceding departmentCost from preceding department
work in process inventorywork in process inventory (1000units)(1000units) 4195 4.1954195 4.195
Transferred in Nov.Transferred in Nov. ((21000units)21000units) 9040590405 4.3054.305
22000units 9460022000units 94600 (94000/22000)(94000/22000) 4.304.30
Cost added by department;Cost added by department;
WIP beginning inventoryWIP beginning inventory
Direct material 3553Direct material 3553
Direct labor 5278Direct labor 5278
FOH 2639FOH 2639
Cost added during this month……Cost added during this month……
Direct material 171380 8.37Direct material 171380 8.37
Direct labor 324800 16.26Direct labor 324800 16.26
FOHFOH 162400162400 8.138.13
Total cost added by department. 670050 32.76Total cost added by department. 670050 32.76
Adjustment for lost unitsAdjustment for lost units 0.100.10
Total cost to accounted for 764650 37.16Total cost to accounted for 764650 37.16

15. Solution.Solution.
Cost accounted for as follows.Cost accounted for as follows.
cost transferred to next department 743200cost transferred to next department 743200
(20000 units X 37.16)(20000 units X 37.16)
WIP ending inventory….WIP ending inventory….
Adjustment cost from preceding department.Adjustment cost from preceding department.
(1500 X 4.40) 6600(1500 X 4.40) 6600
Direct material (1500x60%x8.37) 7533Direct material (1500x60%x8.37) 7533
Direct labor (1500x20%x6.26) 4878Direct labor (1500x20%x6.26) 4878
FOH (1500x20%x8.13)FOH (1500x20%x8.13) 24392439 2145021450
764650764650

16. Solution.Solution.
Additional detail;Additional detail;
 Equivalent production;Equivalent production;
MaterialMaterial ((20000+1500x60%)=20900 units20000+1500x60%)=20900 units
Labour (20000+1500x20%)=20300 unitsLabour (20000+1500x20%)=20300 units
FOH (20000+1500x20%)=20300 unitsFOH (20000+1500x20%)=20300 units
2.2. Unit Cost;Unit Cost;
Material (171380+3550)/20900=8.37Material (171380+3550)/20900=8.37
Labour (324800+5278)/20300=16.26Labour (324800+5278)/20300=16.26
FOH (162400+2639)/20300=8.13FOH (162400+2639)/20300=8.13
3.3. Adjustment For Lost Unit;Adjustment For Lost Unit;
Units after Adjustment 94600/21500=4.40Units after Adjustment 94600/21500=4.40
Unit cost before AdjustmentUnit cost before Adjustment 4.304.30
Adjustment per unit 0.10Adjustment per unit 0.10