John Ltd. manufactures a product which passes through 2 departments, Boiling and
Cooling.
Processing first begins in the Boiling department. After boiling of all the materials have been completed, the product is transferred to Cooling department. In the Cooling department, further materials are added when processing is 25% complete (all the materials in the Cooling department are added at this point only).
Conversion costs are incurred uniformly throughout the process in the Cooling department.
Work in process in the Cooling Department as at 1 Nov amounted to 50,000 units (40% complete). The costs included in these units are as follows :
Boiling Department $900,000
Cooling Department :
- Direct materials $740,000
- Direct labour $210,000
- Overheads $?
During the month of Nov, 140,000 units were completed in the Cooling Department and transferred to finished goods inventory. Units transferred in from Boiling in Nov were charged at $19 per unit. Cooling department's costs in Nov were :
Materials added $2,850,000
Direct labour $2,225,000
Overheads $?
Overhead is allocated on the basis of 110% of direct labour cost.
At the end of the month, 60,000 units were still in process in Cooling. These were estimated to be 30% complete.
Required :
(a) Prepare the Cooling Department production cost report for the month of Nov 2015 using (round up to 2 decimal place) :
(i) Weighted Average method
(ii) FIFO method