CHAPTER 10

PROCESS COSTING
 When a manufacturing process involves the continuous production of identical units rather
than distinguishable job lots, there can be no job orientation. Where there is no obvious
start or finish (because the manufacturing process is endlessly repetitive), we use a
process-costing system to accumulate and allocate manufacturing costs. In using process
costing, all manufacturing costs are allocated first to departments or processes.
 Departmental or process costs are then allocated to units of product as units are completed.
Instead of using job-cost sheets, the costs associated with each department are summarized
on a cost-of-productions report, with one report per department for a period of time. At the
end of each period, the costs accumulated on each such report will be allocated between
end-of-period work in process and units transferred to the next process, or, in the case of
the final process, to finished goods.
 A process cost system determines how manufacturing costs incurred during each period
will be allocated. The allocation of costs within a department is only an information step,
the ultimate goal is to compute total cost per unit for income determination. During a
period some units will be started but will not be completed by the end of the period.
Consequently each department must determine how much of the total costs incurred by the
department is distributed to units still in process and how much is attributable to completed
units.
PROCESS COSTING METHODS ARE USED
BY THE FOLLOWING:
 Industries producing chemicals, petroleum, textiles, steel, rubber, cement, flour,
pharmaceuticals, shoes, plastics, sugar, and coal.
 Firms manufacturing items such as rivets, screws, bolts, and small electrical parts.
 Assembly-type industry which manufactures typewriters, automobiles, airplanes, and
household electric appliances.
 Service industries such as gas, water, and heat.
CHARACTERISTICS OF A PROCESS COST SYSTEM
 Costs are accumulated by department or cost center.
 Each department has its own general ledger Work in Process Inventory account. This
account is debited with the processing costs incurred by the department and credited with
the cost of completed units transferred to another department or to finished goods
inventory.
 Equivalent units are used to restate – work in process inventory to terms of completed units
at the end of a period.
 Completed units and their corresponding costs are transferred to the last department or to
finished goods inventory. By the time units leave the last processing department, total costs
for the period have been accumulated and can be used to determine the unit cost of each
and total finished goods.
 Total costs and unit costs for each department are periodically calculated and analysed with
the use of department cost of production report.
COMPARISON OF JOB ORDER COSTING
AND PROCESS COSTING
 A job order cost accumulation system is most suitable when a single production of batch or
products is manufactured according to a customer’s specifications. A process cost
accumulation system is used when products are manufactured by either mass production
techniques or continuous processing.
 Process costing is suitable when homogenous products are manufactured in large volume.
A customized cabinet manufacturer would use a job order cost system whereas a
manufacturer of 8-ounce jars of peanut butter would use a process cost system.
COMPARISON OF JOB ORDER COSTING
AND PROCESS COSTING
 Under a job order cost accumulation system, the three elements of a product’s cost (direct
materials, direct labor, and factory overhead are accumulated according to identifiable
jobs). Under a process cost system, the three basic elements of a product’s cost are
accumulated according to department or cost center.
PRODUCTION BY DEPARTMENT

 In a process cost system, when units are completed I one department, they are transferred
to the next processing department accompanied by their corresponding costs. A complete
unit of one department becomes the raw materials of the next department until the units
reach finished goods. Thus, the output of Dept. 1 becomes the input of Dept 2. Dept 2
receives both the units produced by Dept 1 and the costs carried by such units. When Dept
2 completes its processing, it transfers out the units and the costs it received from Dept
1plus any cost it incurred while working on the units.
 For example, Sunbloc manufactures chairs and uses three departments to produce one
chair. Dept. 1 cuts and cleans the wood at an average cost of P45.00 per unit. The wood are
then moved to Dept. 2, where they are assembled and put together at an average cost of
P15.00. The next stop is Dept. 3, where they are painted at an average cost of P25.00 per
unit. The completed chairs are transferred from Dept. 3 to finished goods inventory. The
total unit cost of one finished chair is P85.00, computed as follows:
Department 1 P45.00
Department 2 15.00
Department 3 25.00
Total unit cost added P85.00
Generally, the cost per unit increases as units flow through each department. The unit cost
can decrease when units pass through a department if volume is added to the product.
SYSTEM FLOW
 Units and costs flow together through a process cost system. The following equation
summarizes the physical flow of units in a department.

UNITS TO ACCOUNT FOR UNITS ACCOUNTED FOR

Beginning units in process Units completed &transferred
+ +
Units started in process or = Units completed & on hand
Received from previous dept.
+ +
Increase in units due addition of Units in process end
Materials
PROCEDURES – DIRECT MATERIALS,
DIRECT LABOR AND FACTORY OVERHEAD
 The use of a process cost system does not alter the manner of accumulating direct
materials, direct labor and factory overhead costs. The normal procedures of cost
accounting are used to accumulate the three product cost elements. Process costing is
concerned however with the assignment of these costs to the appropriate departmental
Work in Process Inventory account.
DIRECT MATERIALS
Work in Process – Department 1 xxxxx Materials xxxxx

DIRECT LABOR
Work in Process – Department 1 xxxxx Work in Process – Department 2 xxxxx
Work in Process – Department 3 xxxxx Payroll xxxxx

FACTORY OVERHEAD
Work in Process Inventory – Department 1 xxxxx Work in Process Inventory –
Department 2 xxxxx Work in Process Inventory – Department 3 xxxxx Factory
Overhead Applied xxxxx
THE COST OF PRODUCTION REPORT

 The cost of production report is an analysis of the activity in the department or cost center
for the period. All costs chargeable to a department or cost center are presented according
to cost elements.
 Total and unit costs are determined and summarized on a cost of production report. Either
each cost center or department makes such a report, or the individual reports of several
departments are summarized. There are a number of useful formats in preparing the cost of
production report. However, only one format is illustrated in this book regardless of the
format used, the important thing to emphasize is that process costing requires an orderly
approach to assigning costs to products. The following steps provide a uniform approach in
preparing the cost of production report
 Step 1 – The Quantity Schedule
This schedule accounts for the physical flow of units into and out of departments. All
units started in the department must be accounted for and also the disposition of these units,
that is, whether they are transferred to the next department, loss, or remain in the department
(complete or incomplete). This schedule is concerned only with whole units, regardless of their
stages of completion.
 Step 2 – Calculate Equivalent Units and Unit Costs
The concept of equivalent production is basic to process costing. In most cases, not all
units are completed during the period. Thus, there are units still in process at varying stages of
completion at the end of the period. All units must be expressed in terms of completed units in
order to determine unit costs. Equivalent production equals total units completed plus
incomplete units restated in terms of completed units.
FIRST-IN FIRST-OUT METHOD
Equivalent unit cost = Costs added during the period/Equivalent Units (Work done this period)

WEIGHTED AVERAGE METHOD

Equivalent Unit Cost = (Cost last period plus cost added this period)/Equivalent Units (Work
done last period plus work done this period)
 Step 3 – Determine the costs to be accounted for (costs charged to the department)
The cost that a department is responsible for may come from several sources. For one
thing, there maybe some units in beginning inventory that maybe partially complete; and the
costs of direct materials, direct labor and factory overhead that were assigned to these units
last period will become the cost of the beginning inventory and must be accounted for. Also, if
the department is not the first department in the production process, it will receive costs from
other departments when the units from these departments are received in its operations. In
addition, each department will incur direct materials, direct labor and factory overhead in its
own processing. The total of these costs must be determined so that they can be accounted for.
 Step 4 – Account for all costs
After the costs for which the department is responsible for are determined, an accounting
for the disposition of these costs must be made. Some of the costs are assigned to the cost
centers receiving units transferred out of the department. The remaining costs are assigned to
the units remaining in the department and, in some cases, to any units lost.
METHODS OF COSTING UNDER
PROCESS COSTING
1. FIFO Method – under this method, there is an assumed flow of manufacturing operations
and as such it is considered that those units which are first placed in process are presumed
to be the first ones completed and those that are first completed are the ones transferred
out.
Characteristics:
 The work in process beginning in the department will require a separate computation
for its equivalent production.
 The units started, completed and transferred will have its own computation for equivalent
production.
METHODS OF COSTING UNDER
PROCESS COSTING
2. Weighted Average Method – under this method, there is no assumed flow of manufacturing
operations. It involves the merging of the departmental costs, by elements, of the initial work
in process inventory with the costs incurred in the current month and securing a representative
average unit costs by dividing the total element of costs by the equivalent production based
upon the sum of the units in the initial work in process inventory and the units placed into
production during the period.
Characteristics:
 In the computation of the equivalent production, the stage of completion of the work in
process beginning is ignored and the total units completed and transferred during the
period is considered to have 100% completion.
METHODS OF APPLICATION OF
ELEMENTS OF COST TO PRODUCTION
1. Even application – under this method, it is considered that at any stage during the process
of production, the introduction of the three elements of cost are equal with one another.
Only one computation of equivalent production should be made.
2. Uneven application – under this method, the introduction of the elements of cost to
production varies at any stage of the process, hence, there should be as many computations
of equivalent as the elements of cost that are unevenly applied.
COMPUTATION OF EQUIVALENT
PRODUCTION
1. Units received from preceding department 10,000 units Units completed and transferred
8,000 units Units in process, end (60% completed) 2,000 units Materials are added 100% at the
beginning of the process
SOLUTION: Materials Labor & Overhead Actual Work done EP Work done EP Units
received 10,000
Units completed 8,000 100% 8,000 100% 8,000 Units in process 2,000 100%
2,000 60% 1,200
10,000 10,000 9.200
Since materials are added at the beginning of process, then all units started during the period will get 100%
materials. The percentage of completion is always the work done for labor and sometimes overhead.
COMPUTATION OF EQUIVALENT
PRODUCTION
2. Same data as in No. 1, except this time, materials are added 100% at the end of the process
in the department.
Materials Labor & Overhead
Actual Work done EP Work done EP Units received
10,000
Units completed 8,000 100% 8,000 100% 8,000
Units in process 2,000 - - 60% 1,200
10,000 8,000 9.200
In this department, the units will get the materials upon reaching the end of the process in the
department. The units in process at the end are only 60%, hence no materials were added to
these units.
COMPUTATION OF EQUIVALENT
PRODUCTION
3. Same data as in No. 1, except this time, materials are added 50% at the beginning of the
process and the remaining 50% when the units are 40% completed.
Materials Labor & Overhead
Actual Work done EP Work done EP Units received
10,000
Units completed 8,000 100% 8,000 100% 8,000
Units in process 2,000 100% 2,000 60% 1,200
10,000 10,000 9.200
The units in process at the end are 60% completed, therefore the units have passed the second
addition of materials which is done at 40% stage of completion.
COMPUTATION OF EQUIVALENT
PRODUCTION
4. Same data as in No. 1, except this time, materials are added 50% at the beginning of the
process, 30% when the units are 20% complete, 20% at the end of the process.
Materials Labor & Overhead Actual Work done EP Work done EP Units
received 10,000
Units completed 8,000 100% 8,000 100% 8,000 Units in process
2,000 80% 1,600 60% 1,200
10,000 9,600 9.200
In this department, materials are added 50% at the beginning, so the in process will get the first
50%, the second addition is at 20% stage of completion and because the units in process end are
60%, it means they have passed the second addition of materials and this will make their
materials 80% complete.
Illustrative Problem 1
The following data were taken from the books of Michelle Co. for the month of June,

Units Department 1 Department 2

Started 25,000
Completed & transferred 20,000 18,000
In process, end 5,000 2,000
Stage of completion 40% 50%

Costs
Materials P 100,000 P 54,000
Labor 66,000 38,000
overhead 44,000 19,000
 MICHELLE CO.
COST OF PRODUCTION REPORT
for the month of June, 2019
(Department 1)

Materials Labor & Overhead

Quantity Schedule Actual WD EP WD EP

Units started 25,000

Units completed 20,000 100% 20,000 100% 20,000

Units in process, end 5,000 100% 5,000 40% 2,000

25,000 25,000 22,000

Cost charged to the department
Cost added in the department
Materials P 100,000 P 4.00
Labor 66,000 3.00
Overhead 44,000 2.00
Total added 210,000 9.00
Total Cost to be accounted for 210,000 P 9.00
Cost accounted for as follows:
Completed & transferred (20,000 x 9) P 180,000
In process, end
Materials (5,000 x 4) P 20,000
Labor 6,000
Overhead (2,000 x 2) 4,000 30,000
Total cost as accounted for P 210,000
 (Department 2)

Materials Labor & Overhead

Quantity Schedule Actual WP EP WP EP

Units received 20,000

Units completed 18,000 100% 18,000 100% 18,000

Units in process 2,000 50% 1,000

20,000 18,000 19,000

Cost charged to the department

Cost from preceding department P 180,000 P 9.00

Cost added in the department
Materials 54,000 3.00
Labor 38,000 2.00
Overhead 19,000 1.00
Total added 111,000 6.00
Total cost as accounted for P 291,000 P15.00
Cost accounted for as follows

Completed & transferred (18,000 x 15) P 270,000

In process, end
Cost from preceding (2,000 x 9) P 18,000
Materials -
Labor (1,000 x 2) 2,000
Overhead (1,000 x 1) 1,000 21,000
Total cost as accounted for P 291,000
Computation of unit cost

Department 1 Department 2
Materials = 100,000/25,000 Materials = 54,000/18,000
= 4.00 = 3.00

Labor = 66,000/22,000 Labor = 38,000/19,000

= 3.00 = 2.00

Overhead = 44,000/22,000 Overhead = 19,000/19,000

= 2.00 = 1.00
Journal Entries:
a. Work in process - Dept. 1 100,000
Work in process s- Dept. 2 54,000
Materials 154,000
Materials issued.

b. Work in process – Dept. 1 66,000

Work in process – Dept. 2 38,000
Payroll 104,000
Labor cost.

c. Work in process – Dept. 1 44,000

Work in process – Dept. 2 19,000
Factory overhead applied 63,000
Overhead applied to production.
d. Work in process – Dept. 2 180,000
Work in process – Dept. 1 180,000
Inter-dept. transfer of cost.
e. Finished goods 270,000
Work in process – Dept. 2 270,000

MICHELLE CO.
Cost of Goods Manufactured Statement
For the month of June, 2019
Direct Materials P 154,000
Direct Labor 104,000
Factory overhead 64,000
Total manufacturing cost P 321,000
Less: Work in process 51,000
Cost of goods manufactured P 270,000
 Accounting for scrap and defective units in process cost system is essentially the same as in job
order cost system. Cost to rework defective units in a process cost are normally charged to
Factory Overhead Control rather than to Work in Process because defective units is a process cost
system are usually the result of an internal failure rather than customer’s specification. The units
classified as lost in a process cost system are actually the same as the spoiled under the job order
system. The units are still with the company, but due to imperfections discovered during quality
control inspection, they were removed from the manufacturing process.

NORMAL/ABNORMAL LOSSES
 Normal losses are expected while abnormal losses are those in excess of what have been
predicted. The cost of normal lost units are reported as product cost, since eventually they
become part the cost of good units. The cost of abnormal lost units are recognized as period cost
as charges for abnormal lost units are debited to Factory Overhead Control .
A. The cost of normal lost units is charged to (a) completed units, and (b) units in process at the end
when:
1. Discovered at the beginning of the process,
2. Discovered during the process and no quality control inspection is indicated,
3. Discovered at the end of the process.
B. The cost of the abnormal lost units is charged to a loss account or factory overhead
1. Discovered at the beginning
2. Discovered during the process with the point of discovery stated in the problem
3. Discovered at the end of the process
Suggested procedures in calculating the equivalent units of production for normal lost units
under:

1)A-1 and A-2

[Link] not assign work done to the lost units, and
[Link] the unit cost from the preceding department due to decreased number of units.
[Link] above procedures automatically charge the cost of the normal lost units to both completed units and units in process
at the end.

2)A-3
[Link] work done to the lost units
[Link] need to adjust the unit cost from the preceding department despite the lost units
[Link] the cost of the lost units and add to the cost of completed units
3)B-1
[Link] not assign work done to the lost units
[Link] from the preceding department will be charged to factory overhead
Suggested procedures in calculating the equivalent units of production for normal lost units
under:

4) B-2 and B-3

a. Assign work done to the lost units
b. The cost of abnormal lost units is charged as an abnormal loss and debited to Factory
Overhead Control as a period cost.

Abnormal Lost Units:

c. If discovered at the beginning of the process, no need to assign work done. Any cost from the
preceding department is charged as an abnormal loss.
d. If discovered at any other points in the process, with or without indicated inspection point,
assign work done and cost is charged to Factory Overhead Control.
Illustrative Problem 2
Woodrose Corporation produces a product in two departments, A and B . Data for the month of August,
2019 are given as follows for Department B.
UNITS
Received from Department A 50,000
Completed and transferred to warehouse 40,000
In process, Aug. 31 (60% completed) 5,000
Lost during the month 5,000

COSTS
From Department A P 225,000
Added in Department B during the month
Materials 135,000
Labor 103,200
Factory Overhead 103,200
In this department, materials are added 100% at the beginning of the process

Requirements: Prepare cost of production report under the following assumptions:

1. Lost units classified as normal, discovered at the beginning of the process.
2. Lost units classified as normal, discovered at the end of the process.
3. Lost units classified as abnormal-discovered at the end of the process.

SOLUTIONS
4. Lost units classified as normal, discovered at the beginning of the process (A-1)
 WOODROSE CORPORATION
Cost of Production Report
For the month ended August 31, 2019

Materials Labor & OH

Quantity Schedule Actual WP EP WP EP
Units received 50,000

Units completed 40,000 100% 40,000 100% 40,000

Units in process 5,000 100% 5,000 60% 3,000
Units lost 5,000 - - - -
50,000 45,000 43,000
Cost charged to the department
Cost from preceding department P 225,000 P 4.50
Cost added in the department
Materials 135,000 3.00
Labor 103,200 2.40
Factory Overhead 103,200 2.40
Total costs added 341,400 7.80
Adjustments for lost units .50
Total costs to be accounted for P 566,400 P12.80
Cost accounted for as follows:

Completed & transferred P 512,000

In process, end
Cost from preceding department P 25,000
Materials 15,000
Labor 7,200
Overhead 7,200 54,400
Total cost as accounted for P 566,400
Computations:

Unit cost: Materials = 135,000 = 3.00

45,000
Labor = 103,200 = 2.40
43,000
Factory OH = 103,200 = 2.40
43,000
Adjustment for lost units:
Method 1= Cost from preceding department – unit cost from preceding dept.
Total units less units lost
= 5,000 x 4.50
45,000
= 0.50
Computations:

Method 2 = Units lost x unit cost from preceding dept.

Total units less units lost
= 5,000 x 4.50
= 45,000
= 0.50

Cost of units completed = 40,000 x 12.80

In process at the end
Cost from preceding dept. = 5,000 x 5.00
Materials = 5,000 x 3.00
Labor = 3,000 x 2.40
Overhead = 3,000 x 2.40
Journal Entries

1. Work in process – Dept. B 225,000

Work in process – Dept. A 225,000

2. Work in process – Dept. B 341,400

Materials 135,000
Payroll 103,200
Factory Overhead Applied 103,200

3. Finished Goods 512,000

Work in process – Dept. B 512,000
2. Lost units classified as normal discovered at the end of the process (A-3)

Materials Labor & OH

Quantity Schedule Actual WD EP WD EP
Units received 50,000
Units completed 40,000 100% 40,000 100% 40,000
Units in process 5,000 100% 5,000 60% 3,000
Units lost 5,000 100% 5,000 100% 5,000
50,000 50,000 48,000

Cost charged to the department

Cost from preceding department P 225,000 P 4.50
Cost added in the department
Materials 135,000 2.70
Labor 103,200 2.15
Factory Overhead 103,200 2.15
Total cost added 341,400 7.00
Total cost to be accounted for P 566,400 P11.50
Cost accounted for as follows:

Completed & transferred P 517,500

In process, end
Cost from preceding department P 22,500
Materials 13,500
Labor 6,450
Factory overhead 6,450 48,900
Total cost as accounted for P 556,400
Computations
Units cost:
Materials = 135,000 = 2.70
50,000
Labor = 103,200 = 2.15
48,000
Overhead = 103,200 = 2.15
48,000
Computation for the cost of the units completed:

Units completed (40,000 x 11.50) + (5,000 x 11.50) = 517,500

Units in process, end
Cost from preceding dept. = 5,000 x 4.50
Materials = 5,000 x 2.70
Labor = 3,000 x 2.15
Overhead = 3,000 x 2.15

Journal Entries:
1. Work in Process – Department B 225,000
Work in Process – Department A 225,000

2. Work in Process – Department B 341,400

Materials 135,000
Payroll 103,200
Factory Overhead Applied 103,200
3. Finished Goods 517,500
Work in Process – Department B 517,500

Lost units classified as abnormal, discovered at the end.

3. The equivalent production will be the same as when the lost units are classified as normal discovered at the end.
It follows then that the units cost will be the same.

Cost accounted for as follows:

Completed & transferred (40,000 x 11.50) 460,000
Factory Overhead Control (5,000 x 11.50) 57,500
In process, end
Cost from preceding (5,000 x 4.50) 22,500
Materials (5,000 x 2.70) 13,500
Labor (3,000 x 2.15) 6,450
Overhead (3,000 x 2.15) 6,450 48,900
Total costs as accounted for 566,400
Journal Entries:

1. Work in Process – Department B 225,000

Work in Process – Department A 225,000

2. Work in Process – Department B 341,400

Materials 135,000
Payroll 103,200
Factory Overhead Applied 103,200

3. Finished Goods 460,000

Factory Overhead Control 57,500
Work in Process – Department B 517,500
NOTE: If the department given in the previous problem is the last department in the process and the spoiled units
(lost units) are with a sales value P 7.00 each, the cost accounted for section for as follows:
Cost accounted for as follows:
Completed & transferred (40,000 x 11.50) 460,000
Transferred to Spoiled Goods Inventory (5,000 x 7) 35,000
Factory Overhead Control (5,000 x 11.50) 57,500
Less: Market Value of Spoiled Units 35,000 22,500
In process, end
Cost from preceding (5,000 x 4.50) 22,500
Materials (5,000 x 2.70) 13,500
Labor (3,000 x 2.15) 6,450
Overhead(3,000 X 2.15) 6,450 48,900
566,400
Journal Entries:

1. Work in Process – Dept. B 225,000

Work in Process – Dept. A 225,000

2. Work in Process – Dept. B 341,400

Materials 135,000
Payroll 103,200
Factory Overhead Applied 103,200

3. Finished Goods 460,000

Spoiled Goods Inventory 35,000
Factory Overhead Control 22,500
Work in Process – Dept. B 517,500
INCREASE IN UNITS DUE TO ADDITION OF MATERIALS
 With some products, the addition of materials in the subsequent departments may cause the units to increase.
This require adjustment in the unit cost from the preceding department because the total cost will remain the
same while the units to absorb the same cost will increase and this will result in a decrease in the unit cost from
preceding department.
 Computation of adjusted cost from preceding department
= Total cost from preceding department
Units received + increase in units

If lost units are discovered in the same department where we had an increase in units, the adjusted cost will be
computed based on the following assumptions:
a. Lost units normal, discovered at the beginning of the process
Adjusted cost = Cost from preceding Department
Total units received less lost units
b. Lost units normal, discovered at the end of the process
Adjusted cost = Cost from preceding Department
Total units received
c. Lost units abnormal, discovered at the beginning, during or at the end
Adjusted cost = Cost from preceding department
Total units received
ILLUSTRATIVE PROBLEM 3
Seashore Company produces a product which requires processing in the departments. In the second department,
materials are added at the beginning, increasing the units received by 20%. The following data pertain to the
operations of Dept. 2 for June
Units received from Dept. 1 50,000 units
Units completed & transferred to Dept. 3 45,000 units
Units in process, end 15,000 units
Stage of completion 80%

Cost from Dept. 1 P 600,000

Cost added in the Dept.
Materials 240,000
Labor 171,000
Overhead 114,000
Required: Cost of production report.
SOLUTION:
SEASHORE COMPANY
Cost of Production Report
For the month ended June 30, 2019

Materials Labor & OH

Quantity Schedule Actual WD EP WD EP
Units received 50,000
Increase in units 10,000
60,000
Units completed 45,000 100% 45,000 100% 45,000
Units in process 15,000 100% 15,000 80% 12,000
60,000 60,000 57,000
Cost charged to the department

Cost from preceding department P 600,000 P 12.00

Cost added in the department
Materials 240,000 4.00
Labor 171,000 3.00
Overhead 114,000 2.00
Total cost added 525,000 9.00
Adjusted cost from preceding department 10.00
Total cost to be accounted for P1,125,000 P 19.00
Cost accounted as follows

Completed & transferred P 855,000

In process, end
Cost from preceding department P 150,000
Materials 60,000
Labor 36,000
Overhead 24,000 270,000
Total cost accounted for P 1,125,000
Computations: Unit cost
Materials = 240,000 = 4.00
60,000
Labor = 171,000 = 3.00
57,000
Overhead = 114,000 = 2.00
57,000
Adjusted cost from preceding = 600,000 = 10.00
60,000
Journal Entries

1. Work in Process – Dept. 2 600,000

Work in Process – Dept. 1 600,000

2. Work in Process – Dept. 2 525,000

Materials 240,000
Payroll 171,000
Factory Overhead Applied 114,000

3. Finished Goods 855,000

Work in Process – Dept. 2 855,000
Thank You
Thank You !!!
!!!