Cost Accounting and Control 2019 Edition
Problem and Solutions
CHAPTER 7 – PROCESS COSTING SYSTEM
Ex. 7-1. Cost of Production Report. WA
The following information is available for Department A of Siena Manufacturing Company for the month of July:
Work in process, 7/1, 30% complete
Costs:
Materials
Direct labor
Manufacturing overhead
Started in production during July
Costs added:
Materials
Direct labor
Manufacturing overhead
Work in process, 7/31, 20% complete
5,000 units
P12,000
6,000
8,000
20,000 units
P36,000
16,000
20,200
2,000 units
Materials are added at the beginning of the process and Siena Company uses the weighted average method to account
for cost.
Required: Prepare a cost of production report and give all entries required to record the above information.
Units to account
Beginning inventory
Started
5,000 units
20,000 units
25,000 units
Costs to account
Beginning inventory
Added
26,000
72,200
98,200
Units as accounted
Completed
Ending Inventory
Cost Accounted
WAM
Completed
93,610
Ending Inventory
4,700
98,310
23,000 units
2,000 units
25,000 units
FIFO
93,875
4,260
98,135
EUP (WAM)
Materials
23,000
2,000
25,000
Completed
Ending Inventory
EUP
Cost per EUP
48,000
M=
=1.9 2
25,000
CC=
50,200
=2.1 5
23,400
Conversion Costs
23,000
400
23,400
M
CC
Cost of Completed
23,000 x 1.92
23,000 x 2.15
M
CC
Cost of Ending Inventory
2,000 x 1.92
400 x 2.15
WIP – Department A
RMI
FP
FOH
72,200
WIP – Department B
WIP- Department A
EUP (FIFO)
93,610
36,000
16,000
20,200
93,610
44,160
49,450
93,610
3,840
860
4,700
Cost Accounting and Control 2019 Edition
Problem and Solutions
Materials
0
18,000
2,000
20,000
Beginning Inventory
Completed
Ending Inventory
EUP
Cost per EUP
Cost of Completed
Cost Beg. Inv.
Cost to complete - CC
3,500 x 1.65
Cost of B.I. completed
S&C
18,000 x 3.45
36,000
M=
=1.8
20,000
CC=
Conversion Costs
3,500
18,000
400
21,900
36,200
=1.65
21,900
M
CC
26,000
5,775
31,775
62,100
93,875
Cost of Ending Inventory
2,000 x 1.8
400 x 1.65
3,600
660
4,260
Ex. 7-2. Cost of Production Report with lost units using FIFO
Palmolive Asia manufactures gel in three departments and accounts costs using the FIFO method. The Finishing
Department is the last step before the product is transferred to storage vats for bottling. In this department, all materials
are added at the beginning of the process and any lost units which are inherent in production process are discovered at
this point. The following data are available for the Finishing Department for the month of September of the current year.
In process, Sept. 1 – 10,000 units (75% complete)
Costs from Preceding Department
Costs this Department
Materials
Labor
Overhead
P76,000
P43,000
78,000
84,000
Received from preceding dept. – 40,000 units
Costs added this period:
Materials
Labor
Overhead
Costs from preceding dept.
Finished and transferred to storage – 35,000 units
In process, Sept. 30, ½ complete – 10,000 units
P140,000
324,000
260,000
280,000
Required: Prepare a cost of production report and give all entries required to record the above information.
Units to account
Beginning inventory
Started
10,000 units
40,000 units
50,000 units
Units as accounted
Completed
Ending Inventory
Uncounted (loss)
35,000 units
10,000 units
45,000 units
5,000 units
50,000 units
Cost Accounting and Control 2019 Edition
Problem and Solutions
Beginning Inventory (10,000)
Started and Completed (25,000)
Ending Inventory (10,000)
Normal Loss – Continuous (5,000)
EUP
Cost per EUP
140,000
M=
=4
35,000
CC=
TI =
584,000
=17.97
32,500
280,000
=8
35,000
Materials
0
25,000
10,000
0
35,000
Conversion Costs
2,500
25,000
5,000
0
32,500
Cost of Completed
Beginning Inventory
Cost to Complete:
CC
2,500 x 17.97
Cost of B.I. completed
Started and Completed
25,000 x 29.97
M
CC
TI
Cost of Ending Inventory
10,000 x 4
5,000 x 17.97
10,000 x 8
Transferred In
0
25,000
10,000
0
35,000
281,000
44,925
325,925
749,250
1,075,175
40,000
89,850
80,000
209,850
Cost Accounting and Control 2019 Edition
Problem and Solutions
Ex. 7-4. Cost of Production report using FIFO
FRC Corporation operates two departments in its operations, namely Process 1 and Process 2. Below are information
gathered from the production department during the six months ended June 30, 2019:
Units
Work in process, Jan 1
Started in process
Transferred out
Process 1
12,000
88,000
80,000
Process 2
10,000
74,000
Costs:
Work in process, Jan. 1
Added this period:
Materials
Labor
Overhead
P10,400
P21,370
P39,600
28,400
5,200
P69,598
54,940
36,900
The work in process on Jan. 1 is 2/3 complete in Process 1 and 3/5 complete in Process 2 while the work in process on
June 30 is 3/5 complete in Process 1 and 7/8 complete in Process 2. Materials are applied 100% at the start of the
process in Process 1 while in Process 2, 30% are applied at the start of the process, 40% when the process is one halfcompleted and 30% at the end of the process. Conversion costs are applied evenly in all the departments.
Required:
1. Determine the EUP for materials and conversion cost in Process 1 & Process 2.
2. Allocate the total costs to account to completed and transferred and to work in process end.
Process 1
Beginning Inventory: 2/3 complete
Ending Inventory: 3/5 complete
Materials Application: Start – 100%
Process 2
Beginning Inventory: 3/5 complete
Ending Inventory: 7/8 complete
Materials Application: Start – 30%; ½ complete – 40%;
End – 30%
PROCESS 1
Materials
0
68,000
20,000
88,000
Beginning Inventory (12,000)
Started and Completed (68,000)
Ending Inventory (20,000)
EUP
Cost per EUP
M=
39,600
=0.45
88,000
CC=
Cost of Completed
Beginning Inventory
Cost to Complete – CC
4,000 x 0.4
Started and Completed
68,000 x 0.85
33,600
=0.4
84,000
M
CC
Cost of Ending Inventory
20,000 x 0.45
12,000 x 0.4
Conversion Costs
4,000
68,000
12,000
84,000
10,400
1,600
57,800
69,800
9,000
4,800
13,800
Cost Accounting and Control 2019 Edition
Problem and Solutions
PROCESS 2
Beginning Inventory (10,000)
Started and Completed (64,000)
Ending Inventory (16,000)
EUP
Cost per EUP
M=
69,598
=0.89
78,200
CC=
TI =
91,840
=1.12
82,000
69,800
=0.8725
80,000
Materials
3,000
64,000
11,200
78,200
Conversion Costs
4,000
64,000
14,000
82,000
Cost of Completed
Beginning Inventory
Cost to Complete:
M
3,000 x 0.89
CC
4,000 x 1.12
Cost of B.I. completed
Started and Completed
64,000 x 2.8825
Cost of Ending Inventory
11,200 x 0.89
14,000 x 1.12
16,000 x 0.8725
M
CC
TI
Transferred In
0
64,000
16,000
80,000
21,370
2,670
4,480
28,520
184,480
213,000
9,968
15,680
13,960
39,608
Ex. 7-5. Two types of materials, uneven application
The cost accountants of Sonnex Company provides you with the following data from their 2 nd Production Department.
Opening Inventory, 3/8 completed
Received from preceding dept.
Transferred to next dept.
Ending inventory:
30% is 30% complete
30% is 50% complete
40% is 80% complete
12,000
30,000
27,000
15,000
Sonnex Company uses two types of materials in the production. Type 1 is added at the start of the process while Type 2 is
added as follows: 20% at the start of the process, 25% when the process is 40% complete, 25% when the process is 75%
complete and the balance at the end of the process.
Required: Determine the equivalent units of production for Materials: Type 1 and Type 2.
Type 1
Start/Beginning
Type 2
20% - start of the process
25% - @40% complete
25% - @75% complete
30% - end
EUP (WAM)
Completed (27,000)
Ending Inventory:
4,500 (30% complete)
4,500 (50% complete)
6,000 (80% complete)
EUP (WAM)
Type 1
27,000
Type 2
27,000
15,000
42,000
900
2,025
4,200
34,125
Cost Accounting and Control 2019 Edition
Problem and Solutions
EUP (FIFO)
Type 1
0
15,000
15.000
30,000
Beginning Inventory (12,000)
Started and Completed (15,000)
Ending Inventory
EUP
Type 2
9,600
15,000
7,125
31,725
Problem 7-3. Process costing with lost units: WA
Starlight Manufacturing Company uses two types of materials in its processing operation and adds these materials as
follows:
4 pounds of Materials X at the start of the process and two pounds of Material Y when the process is 50% complete.
Conversion costs are incurred uniformly throughout the process.
At 50% stage of completion, inspection occurs and any spoiled units are scrapped. 5% of the units processed up to
inspection point are considered normal.
The following data pertains to August operation of Starlight Company.
In process, Aug 1
In process, Aug 31
Units completed & transferred
Units started
Unit costs:
Material X
Materials Y
Conversion costs per EUP
18,000 units, 75% complete
6,000 units, 25% complete
73,800 units
65,000
P6.00 per pound
P4.00 per pound
P8.00
Required: Prepare a cost of production report
Material x
73,800
6,000
3,200
83,000
Completed (73,800)
Ending Inventory (6,000)
Normal Loss (3,200)
Abnormal Loss (0)
Total: (83,000)
Cost per EUP
MX=6 x 4=24
Materials
Conversion Costs
MY =4 x 2=8
Material Y
73,800
0
0
73,800
Cost of Completed
73,800 x 32
73,800 x 8
Normal Loss
CC=8
M
CC
Normal Loss
3,200 x 24
1,600 x 8
76,800
12,800
89,600
M
CC
Cost of Ending Inventory
6,000 x 24
1,500 x 8
Conversion Costs
73,800
1,500
1,600
76,900
2,361,600
590,400
2,952,000
89,600
3,041,600
144,000
12,000
156,000
Cost Accounting and Control 2019 Edition
Problem and Solutions
TEST MATERIAL 2. (No spoilage)
PRC Manufacturing Company computed its equivalent unit costs under FIFO process costing as follows:
Last Period
This period
Direct materials
P34.00
P35.00
Packaging
4.00
5.00
Direct labor
13.00
12.50
Overhead
15.60
15.00
Direct materials and packaging are added at the start and end of the process, respectively. The EUP of IP, beginning
under FIFO method is as follows:
Direct materials, 54,000
Direct labor costs, 16,200
Overhead costs, 18,000
PRC Manufacturing Company transferred a total of 400,000 units to finished goods warehouse during August and had
25,000 units in ending IP inventory. The ending inventory units were 40 percent complete as to direct labor and 30 percent
complete as to overhead.
1. How much is the cost of work in process, beginning?
a. P3,596,400
b. P2,362,500
c. P2,327,400
d. P3,380,400
Completed portion of Beginning Inventory:
Direct Materials
Packaging
Direct Labor
Overhead
2. The EUP for the period was:
Materials
Direct Materials
Packaging
a. 371,000
400,000
b. 400,000
346,000
c. 425,000
346,000
d. 425,000
400,000
Beginning Inventory (54,000)
Started & Completed (346,000)
Ending Inventory (25,000)
EUP
Cost per EUP
Current Cost
Units to account
Beginning inventory
Started
Cost of Beginning Inventory
Cost to Complete
Started & Completed
Total
(54,000 x 34)
(0)
(16,200 x 13)
(18,000 x 15.60)
1,836,000
0
210,600
280,800
2,327,400
Conversion Costs
Direct Labor
Overhead
393,800
389,500
356,000
353,500
393,800
395,800
372,200
371,500
DM
0
346,000
25,000
371,000
35
12,985,000
54,000 units
371,000 units
425,000 units
DM
1,836,000
0
12,110,000
13,946,000
PC
54,000
346,000
0
400,000
5
2,000,000
DL
37,800
346,000
10,000
393,800
12.50
4,922,500
Units as accounted
Completed
Ending Inventory
PC
0
270,000
1,730,000
2,000,000
DL
210,600
472,500
4,325,000
5,008,100
OH
36,000
346,000
7,500
389,500
15
5,842,000
400,000 units
25,000 units
425,000 units
OH
230,800
540,000
5,190,000
6,010,800
Cost Accounting and Control 2019 Edition
Problem and Solutions
Uniqlo Company adds materials when the process is 50% complete and conversion costs are added uniformly throughout
the process. The following Cost of Production Report was prepared by an inexperience cost accountant that uses FIFO
method in accumulating costs.
Physical units:
In process, beg (60% complete)
Started in process
Total units to account
Accounted as follows:
Completed and transferred
In process, end (45% complete)
30,000
200,000
230,000
190,000
40,000
Costs:
In process, beg. Costs (Mat. P67,800; CC, P29,300)
Added during the month (Mat, P579,000; P248,900)
Total costs to account
Accounted as follows:
Costs transferred to next department
In Process, costs
As accounted
P97,100
827,900
P925,000
P805,600
119,400
P295,000
3. The EUP for materials & conversion costs is:
Materials
Conversion costs
a. 190,000
200,000
b. 180,000
190,000
c. 160,000
190,000
d. 200,000
190,000
4. The correct amount of costs transferred to next department amounted to:
a. P904,820
b. P901,620
c. P815,960
d. P785,620
5. What is the balance of the WIP account at the end of the period?
a. P139,580
b. P29,880
c. P26,280
d. P23,580
EUP (FIFO)
Materials
0
160,000
0
160,000
Beginning Inventory (30,000)
Completed (160,000)
Ending Inventory (40,000)
EUP
Cost per EUP
579,000
M=
=3.62
160,000
CC=
Conversion Costs
12,000
160,000
18,000
190,000
Cost of Completed
Cost Beg. Inv.
Cost to complete - CC
12,000 x 1.31
S&C
160,000 x 4.93
248,900
=1.31
190,000
M
CC
Cost of Ending Inventory
0
18,000 x 1.31
91,100
15,720
788,800
901,620
0
23,580
Cost Accounting and Control 2019 Edition
Problem and Solutions
23,580
TEST MATERIAL 3 (with spoilage)
Specialty Store makes Christmas décor in two departments, Forming and Decorating. On December 1, forming had 2,500
in process that were 80% complete as to materials and 60% converted. During December, 15,000 units were started and
500 were in process at the end of the month, 75% incomplete as to materials and conversion costs. The following are
available for the Forming Department under FIFO method.
Beginning costs
P20/EUP
P18/EUP
Materials
Labor & OH
Current costs
P10/EUP
P12/EUP
1. The cost of the 2,500 units in the Forming Department on Dec. 1 is
a. P28,000
b. P50,000
c. P67,000
d. P95,000
2. The total cost of materials added during December is
a. P151,250
b. P187,500
c. P204,000
d. P210,000
Cost of Beginning Inventory
Materials
Conversion Cost
(2,000 x 20)
1,500 x 18
40,000
27,000
67,000
Cost Added:
Beginning Inventory
Started & Completed
Ending Inventory
500
14,500
1250
15,125
x 10
P151,250
Toby Company, a manufacturer of baseball bats, buy wood as a direct material for baseball bats. The forming department
processes the baseball bats and the bats are then transferred to the Finishing department where additional work is
applied. The Forming department began manufacturing 10,000 bats during the month of November. There was no
beginning inventory. Costs for the Forming department for November were as follows:
Direct materials
Conversion costs
Total
P33,000
17,000
P50,00
A total of 8,000 bats were completed and transferred to the Finishing Department; the remaining 2,000 bats were still in
the Forming process at the end of month. All of the Forming department’s direct materials were placed in process, but on
average only 25% of the conversion cost was applied to the ending work in process inventory.
3. The cost allocated to (1) units transferred to the Finishing and (2) the work in process at the end of November is
a. (1) P50,000 and (2) P10,000
b. (1) P40,000 and (2) P2,500
c. (1) P53,000 and (2) P50,000
d. (1) P42,400 and (2) P7,600
Cost Accounting and Control 2019 Edition
Problem and Solutions
Materials
8,000
2,000
10,000
Completed (8,000)
Ending Inventory (2,000)
EUP
Cost per EUP
33,000
M=
=3.3
10,000
CC=
M & CC
Conversion Costs
8,000
500
8,500
Cost of Completed
23,000 x 5.3
42,400
17,000
=2
8,500
M
CC
Cost of Ending Inventory
2,000 x 3.3
500 x 2
6,600
1,000
7,600
The cost department of BGC Corp. operates a process cost system using the average method. Production records
showed the following data for one of the three production departments.
Received from preceding dept.
Completed & transferred to next dept.
Completed & on hand
In process, end
100,000 kilos
71,840 kilos
4,160 kilos
24,000 kilos
In this department additional material is added to the units from the preceding department. Three distinctly different types
of materials are used at three separate stages of production in this department.



Material A is added at the start of the process
Material B is added when the process is one-fourth completed
Material C is added when the process is three-fourth completed
Labor and overhead incurred at a uniform rate throughout the process in this department. Examination of the unfinished
work discloses that:
¼ was 7/8 complete; ½ was ½ completed; and ¼ was 1/6 completed.
4. Calculate the EUP for material A, B and C
a. 100,000, 100,000, 100,000
b. 100,000, 100,000 82,000
c. 100,000, 94,000, 94,000
d. Not given
Venux Textiles Company manufactures a variety of natural fabrics for the clothing industry. The following data pertains to
the Weaving Department for the month of September:
Completed (76,000)
Ending:
6,000, 7/8 completed
12,000, ½ completed
6,000, 1/6 complete
Material A
76,000
Material B
76,000
Material C
76,000
16,000
12,000
6,000
100,000
6,000
12,000
94,000
6,000
82,000
Cost Accounting and Control 2019 Edition
Problem and Solutions
WA
60,000
52,000
50,000
EUP for Direct materials
EUP for conversion costs
Completed & transferred out
Work in process, Sept. 1 20,000 units
Costs:
Direct materials
Conversion costs
Costs added in September:
Direct materials
Conversion costs
FIFO
40,000
44,000
50,000
P94,000
44,400
P164,000
272,800
5. The work in process beginning is
a. 100% converted
b. 60% converted
c. 40% converted
d. 0% converted
WAM
Completed (50,000)
Ending Inventory (10,000)
EUP
Materials
50,000
10,000
60,000
Conversion Costs
50,000
2,000
52,000
Materials
0
30,000
10,000
40,000
Conversion Costs
12,000
30,000
2,000
44,000
FIFO
Beginning Inventory (20,000)
S & C (30,000)
Ending Inventory (10,000)
EUP
12,000 / 20,000 = 60% incomplete; 40% completed/converted
Cost Accounting and Control 2019 Edition
Problem and Solutions
TEST MATERIAL 4. (with spoilage)
Splenda Company has the following information for October of the current year:
Units:
Started
WIP beginning, 65% incomplete
Normal spoilage (discrete)
Abnormal spoilage
WIP, ending, 70% complete
100,000
20,000
3,500
5,000
14,500
Costs:
Work in process, beginning
Materials
Conversion costs
P15,000
10,000
All materials are added at the start of the production process.
Splenda Company inspects goods at 75% completion as to conversion. The costs per EUP for materials and conversion
are P1 and P1.5, respectively, under FIFO method.
1. The cost assigned to work in process, end is
a. P21,025
b. P25,375
c. P29,725
d. P36,250
2. The cost assigned to completed units is:
a. P237,000
b. P244,437.50
c. P242,500
d. P267,500
BI (20,000)
S/C (77,000)
EI (14,500)
NL (3,500)
AL (5,000)
EUP
M
0
77,000
14,500
3,500
5,000
100,000
CC
13,000
77,000
10,150
2,625
3,750
106,525
Cost of Completed
BI
CTC (CC)
S/C
(13,000 x 1.5)
(77,000 x 2.5)
NL
M
CC
Normal Loss
3,500 x 1
2,625 x 1.5
25,000
19,500
192,500
237,000
7,437.5
244,437.50
M
CC
Cost of Ending Inventory
14,500 x 1
10,150 x 1.50
3,500
3,937.5
7,437.5
M
CC
Abnormal Loss
5,000 x 1
3,750 x 8
14,500
15,225
29,725
5,000
5,625
10,625