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Cost of Production Report with Materials Added. Sanderson, Inc. manufactures Product L in two departments, No. 1 and No. 2. Materials are added in each department increasing the number of units manufactured. A summary of the cost information for the company's first month of operations (January) is as follows:
Department Department
No. 1 No. 2
Materials $ 90,000 $ 67,500
Labor 39,000 41,400
Factory overhead 7,800 20,700
Total $136,800 $129,600
Department Department
No. 1 No. 2
Materials $ 90,000 $ 67,500
Labor 39,000 41,400
Factory overhead 7,800 20,700
Total $136,800 $129,600
The production foreman reports that 300,000 units were put into production in Department 1. Of this quantity, 75,000, a normal number, were lost in production; and 180,000 were completed and transferred to Department 2. For the balance in process at the end of the month, all materials had been added, but only one third of the labor and factory overhead had been applied.
In Department 2, 45,000 units were purchased outside and added to the units received from Department 1; 195,000 units were completed and transferred to finished goods inventory. The remainder were in process at the end of the month with all materials added, but only 40% complete for labor and factory overhead.
Required: A cost of production report of Sanderson, Inc for January.
