Nakahiga, Inc., manufactures mattress that passes through two processes: Cutting and Assembly. All manufacturing costs are added
Question:
Nakahiga, Inc., manufactures mattress that passes through two processes: Cutting and Assembly. All manufacturing costs are added uniformly in the Cutting Department. Information for the Cutting Department for December follows:
Work in process, December 1:
Units (30% Complete) 5,000 Units
Direct materials P10,000
Direct labor P4,000
Overhead P1,000
During December, 60,000 units were started but only 62,000 units were completed and transferred to Assembly. The following costs were incurred by the Cutting Department during December:
Direct materials P150,000
Direct labor 40,000
Overhead 10,000
There were 3,000 units remaining in the Cutting Department on December 30 that were 30 percent complete.
On January 1, the cutting Department continued its production for January were it started 57,000 new units. On January 31, 10,000 WIP units were in ending inventory, 50% complete.
Costs added by Cutting during January included
Direct materials P120,000
Direct labor P40,000
Overhead P8,000
Prepare a cost of production report using the weighted average and FIFO methods for Cutting for December and January 2020.