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Cost of Production Report — FIFO Method. Jersey-Schell, Inc. uses three departments to produce a hair spray. The Finishing Department is the third and last step before the product is transferred to storage vats for bottling or wholesale distribution.
All materials needed to give the hair spray its final composition are added at the beginning of the process in the Finishing Department. Any lost units occur only at this point.
The company uses the FIFO method in its cost system. The following data for the Finishing Department for October have been made available:
Production data:
In process, October 1 10,000 gals.
(Labor and factory overhead, 3/4complete)
Transferred in from preceding department 40,000 gals.
Finished and transferred to storage 35,000 gals.
In process, October 31 10,000 gals.
Additional data:
Inventory work in process — October 1:
Cost from preceding department $ 38,000
Cost from this department:
Materials 21,500
Labor 39,000
Factory overhead 42,000
Total inventory work in process, October 1 $140,500
Transferred in during October $140,000
Inventory work in process — October 1:
Cost from preceding department $ 38,000
Cost from this department:
Materials 21,500
Labor 39,000
Factory overhead 42,000
Total inventory work in process, October 1 $140,500
Transferred in during October $140,000
Cost added in this department:
Materials $ 70,000
Labor 162,500
Factory overhead 130,000
Total cost added $362,500
Total cost to be accounted for $643,000
Required: A cost of production report for October.
