The Portland Cement Manufacturing Company, Inc.

Manufactures
cement. Its processing operations involve quarrying, grinding,
blending, packing and sacking. For cost accounting and control
purposes, there are four processing centers. Separate costs of
production reports are prepared in detail with respect to these cost
centers. The following information pertains to the operation of
Grinding Department for July 2009:

Work in process, Beg.

July 1
Unit started in the
production
Work in process, End,
July 31
Cost added during the
month

Units

Materials

Labor

800 bags

$12,000

$40,000

$41,500

$321,50
0

Factory
Overhead
$16,000

40,000
bags
5,000
bags
$200,000

The beginning work in process was 100% complete with respect to

materials and 60% complete with respect to labor and factory
overhead.
The ending work in process inventory was 90% complete with
respect to materials and 30% complete with respect to labor and
factory overhead.
Required: Assume that the company uses the FIFO method of
accounting for units and costs.
1. Compute the units to be assigned costs.
2. Compute the equivalent units for the months activity for the
first department.
3. Determine the cost per equivalent units for the month for
material & conversion.
4. Prepare the cost of production report (Allocated costs for
completed and partially completed units for the month of July
2009.)
5. Prepare journal entries for the month of July for materials,
labor and factory overhead.