Exercise 1 (Average method)

1. Spice Bread Corporation produces a single product. The Cooking department is

first department. Data for December 2007 follow:
Quantity :
Work in Process, beginning inventory 970
Started in current month 9.400
Transferred out to next department 9.134
Work in Process, ending inventory 1.236
Stage of Completion of Work in Process:
Beginning Ending
Materials 60 % 50 %
Labor 50 % 70 %
Factory Overhead 70 % 60 %
Cost:
Beginning Cost Charged in
Inventory Current Month
Materials $ 7,382 $ 73,843
Labor 1,397 17,512
Factory Overhead 1,164 18,574

Required:
1. Compute equivalent production units in the Cooking Department for
December, 2007 (under Average method)
2. Prepare a cost of production report for the Cooking Department for
December, 2007 (under Average method)

Exercise 2 (Average method & Lost units)

Spice Bread Corporation produces a single product. The Cooking department is first
department. Data for December 2007 follow:
Quantity :
Work in Process, beginning inventory 970
Started in current month 9.400
Transferred out to next department 9.134
Work in Process, ending inventory 1.056
Lost units 180
Stage of Completion of Work in Process:
Beginning Ending
Materials 60 % 50 %
Labor 50 % 70 %
Factory Overhead 70 % 60 %
 Cost:
Beginning Cost Charged in
Inventory Current Month
Materials $ 7,382 $ 73,843
Labor 1,397 17,512
Factory Overhead 1,164 18,574

Required:
1. Compute equivalent production units in the Cooking Department for
December, 2007 (under Average method)
2. Prepare a cost of production report for the Cooking Department for
December, 2007 (under Average method)

Exercise 3 ( FIFO method)

Spice Bread Corporation produces a single product. The Cooking department is first
department. Data for December 2007 as follow:
Quantity :
Work in Process, beginning inventory 970
Started in current month 9.400
Transferred out to next department 9.134
Work in Process, ending inventory 1.056
Lost units (spoilage) 180
Stage of Completion of Work in Process:
Beginning Ending
Materials 60 % 50 %
Labor 50 % 70 %
Factory Overhead 70 % 60 %
Cost:
Beginning Cost Charged in
Inventory Current Month
Materials $ 7,382 $ 73,843
Labor 1,397 17,512
Factory Overhead 1,164 18,574

Inspection reveals that the end of processing (absorption cost 100%)

Required:
1. Compute equivalent production units in the Cooking Department for
December, 2007 (under FIFO method
2. Prepare a cost of production report for the Cooking Department for
December, 2007 (under FIFO method)