Principles of Cost Accounting: P6-9 Mt. Orab Manufacturing Company uses a process cost system

Principles of Cost Accounting

P6-9 Average and FIFO cost methods; losses at the beginning and end of processing
Mt. Orab Manufacturing Company uses a process cost system. Its manufacturing operation is carried on in two departments: Machining and Finishing. The Machining Department uses the average cost method and the Finishing Department uses the FIFO cost method. Materials are added in both departments at the beginning of operation, but the added materials do not increase the number of units being processed. Units are lost in the Manufacturing Department throughout the production process, and inspection occurs at the end of the process. The lost units have no scrap value and are considered to be normal loss.
Production statistics for July show the following data:
Machining Finishing
Units in process, July 1 (all material
40% of labor and overhead) 20,000
Units in process, July 1 (all material
80% of labor and overhead) 40,000
Units started in production 140,000
Units completed and transferred 100,000
Units transferred from Machining 100,000
Units completed and transferred to
Finished goods 100,000
Units in process, July 31 (all material,
60% of labor and overhead) 40,000
Units in process, July 31 (all material,
40% of labor and overhead) 40,000
Units lost in production 20,000

Production Costs Machining Finishing
Work in process, July 1:
Materials 40,000 110,000
Labor 24,000 60,000
Factory overhead 8,000 40,000
Costs in Machining Department 240,000
Costs incurred during month:
Materials 280,000 240,000
Labor………… 180,000 160,000
Materials 60,000 80,000

Required:
Prepare a cost of production summary for each department. (Round to three decimal places.)
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