PRACTICAL ACCOUNTING 2
PROCESS COSTING
1. Department II of Charity Manufacturing Company presents the following production data for the
month of May, 2011:
Opening inventory, 3/8 completed …………………………………………….. 4,000 units
Started in process ……………………………………………………………………….. 13,000 units
Transferred …………………………………………………………………………………. 9,000 units
Closing inventory, 1/2 completed ………………………………………………. 4,000 units
3/4 completed……………………………………………….. 4,000 units
What are the equivalent units of production for the month of May, 2011?
FIFO Method : 12,500 unit; Average Method: 14,000 units
2. Walden Company has a process cost system. All materials are introduced at the beginning of the
process in Department One. The following information is available for the month of January
2011:
Work-in-process, 1/1/2011
(40% complete as to conversion costs)………………………….. 500 units
Started in January ……………………………………………………………………….. 3,000 units
Transferred to Department Two during January…………………………. 2,000 units
Work-in-process, 1/31/2011
(25% complete as to conversion costs)…………………………..
400 units
What are the equivalent units of production for the month of May, 2011?
FIFO Method: Materials = 2,000; Conversion = 2,000
Average Method: Materials = 2,500; Conversion = 2,200
3. Department A is the first stage of Mann Company’s production cycle. The following information
is available for conversion costs for the month of April 2011:
Work-in-process, beginning (60% complete)…………………………..
Started in April ………………………………………………………………………..
Completed in April and transferred to department B………………
Work-in-process, ending (40% complete)……………………………..
Units
20,000 units
340,000 units
320,000 units
40,000 units
The equivalent units for conversion cost calculation are:
FIFO Method: 324,000; Average Method: 336,000
4. Bart Co. adds materials at the end of the process in Department M. The following information
pertain to Department m’s work-in process during April:
Units
Work-in-process, April 1
(60% complete as to conversion costs)………………………
3,000 units
Started in April ………………………………………………………………………… 25,000 units
Completed ………………………………………………………………………………. 20,000 units
Work-in-process, April 30
(75% complete as to conversion costs)………………………….. 8,000 units
What are the equivalent units of production for the month of April?
FIFO Method: Materials = 20,000; Conversion = 24,200
Average Method: Materials = 20,000; Conversion = 26,000
5. Sussex Corporation’s production cycle starts in the Mixing department. The following
information is available for April:
Units
WIP, April 1 (50% complete)…………………………………………..……..
40,000 units
Started in April ……………………………………………………………………….. 240,000 units
WIP, April 30 (60% complete)………………………………….……………..
25,000 units
Materials are added at 50% stage of completion in the Mixing Department. What are the
equivalent units of production for the month of April?
FIFO Method: Materials = 280,000; Conversion = 250,000
Average Method: Materials = 280,000; Conversion = 270,000
6. On September 30, work-in-process totaled 9,000 units 60% complete (based on conversion costs
added uniformly throughout the department and material added at the start of the process). A
total of 100,000 units were transferred to the next department during October. On October 31,
a total of 8,000 units 40% complete (based on conversion costs) were still in process in
Department A.
Using the weighted-average cost flow method, which of the following equivalent units should be
used in the calculation of costs for October? Transfer Costs = 108,000; Materials = 108,000;
Conversion = 103,200
7. BWIP was 60% complete as to conversion costs, and EWIP was 45% complete as to conversion
costs. The peso amount of the conversion cost included in EWIP (using the weighted average
method) is determined by multiplying the average unit conversion costs by what percentage of
total units in EWIP? 45%
8. The following data refer to the units processed by the grinding department for a recent month.
Beginning work-in-process ………………………..………………………….. 12,000
Units started ………………………………………………………………………….. 200,000
Units completed ………………………………………………………………..…… 192,000
Ending work-in-process ……………………………………..………………….. 20,000
The beginning work-in-process was 60% complete, and the ending work-in-process is 70%
complete. What are the equivalent units of production for the month?
FIFO Method: 198,800; Average Method: 206,000
9. With the following data for a company using the FIFO process cost system, calculate the
equivalent units for materials and conversion costs:
Percent Complete
Whole
Conversion
Units
Materials
Costs
Beginning inventory……………………..
10
100%
30%
Transferred in ……………………………….
100
Transferred out …………………………….
80
Ending inventory …………………………..
30
100%
40%
Materials = 100; Conversion Costs = 89
10. A company produces plastic drinking cups and uses a process cost system. Cups go through
three departments – mixing, molding, and packaging. During the month of June, the following
information is known about the mixing department.
Work-in-process, at June 1 …………………………….…
10,000 units
An average of 3/4 complete
Units completed …………………………………………………. 140,000 units
Work-in-process, at June 30 ………………………….…
10,000 units
An average of 1/4 complete
Materials are added two points in the process: Material A is added at the beginning of the
process and Material B at the midpoint of the mixing process. Conversion costs are incurred uniformly
throughout the mixing process. Under a FIFO costing flow, the equivalent units for Material A, Material
B, and conversion costs respectively for the month of June (assuming no spoilage) would be: 150,000;
130,000; 137,500
11. Glo Co., a manufacturer of combs, budgeted sales of 125,000 units for the month of April. The
following additional information is provided:
Number of units
Actual inventory at April 1
Work-in-process ……………………………………………..……………………… None
Finished goods ………………………………………………………………………… 37,500
Budgeted inventory at April 30
Work-in-process (75% processed) …………………………………………… 8,000
Finished goods ………………………………………………………………………… 30,500
How many equivalent units of production did Glo budget for April? 123,500
12. Bronson Company, which had 6,000 units in work-in-process at January 1 that were 60%
complete as to conversion costs. During January, 20,000 units were completed. At January 31,
8,000 units remained in WIP which were 40% complete as to conversion costs. Materials are
added at the beginning of the process.
Using the weighted-average method, the equivalent units for January for conversion costs
were? 23,200
13. Using the same information at No. 12, how many units were started during January? 22,000
14. Kew Co. had 3,000 units in work-in-process at April 1 which were 60% complete as to conversion
cost. During April, 10,000 units were completed. At April 30, 4,000 units remained in work-inprocess which were 40% complete as to conversion cost. Direct materials are added at the
beginning of the process. How many units were started during April? 11,000
15. The Wiring Department is the second stage of Flem Company’s production cycle. On May 1, the
BWIP contained 25,000 units which were 60% compete as to conversion costs. During May,
100,000 units were transferred –in from the first stage of Flem’s production cycle. On May 31,
EWIP contained 20,000 units which were 80% complete as to conversion costs. Materials added
at the end of the process. Using the weighted – average method, the EUP on May 31 were :
Transferred-in Costs = 125,000; Materials = 105,000; Conversion Costs = 121,000
16. If 100 units are 70% complete, 30 units 60% complete, 200 units 40% complete, and 60 units 5%
complete, how many EUP have been produced? 171
17. Department Z of the Libra Mfg. Corporation had the following data for the month of October,
2011:
Beginning work in process, 70% complete …………………………………………….. 40,000 units
Started in process during the month ………………………………………………………. 300,000 units
Ending work in process, 80% complete ………………………………………………….. 60,000 units
The cost of the beginning work in process was P140,000, and the production costs for the month
amounted to P1,172,000. How many equivalent production units were completed in October,
2011 using FIFO Method? 300,000
18. Richardson Company computed the flow of physical units completed for Department M for the
month of March 2011 as follows:
Units completed:
From work-in-process on March 1, 2011 ……………………………………….. 15,000
From March production …………………………………………………………………. 45,000
60,000
Materials are added at the beginning of the process. The 12,000 units of work in process at
March 31, 2011, were 80% complete as to conversion costs. Using the FIFO method, the
equivalent units for March conversion costs were: 60,600
19. Pure Spring Water Co. bottles spring water. The spring water first undergoes filtration in
Department 1 and is eventually bottled in Department 2. A quantity schedule for May 2011
follows:
Department 1:
Units started in process ……… 110,000
Units transferred to Dept. 2…… 80,000
Units in process, end …………….. 30,000
Department 2:
Units received from Dept. 1 ………… 80,000
Units transferred to finish stock…… 61,400
Units in process, end ……………….….. 18,600
Units in process at the end in both departments are 72%. In Department 2, what is the
equivalent production for conversion costs? 74,792
20. On November 1, Yankee Company had 20,000 units of WIP in Department No. 1 which were
100% complete as to material costs and 20% complete as to conversion costs. During
November, 160,000 units were started in Department No.1 and 170,000 units were completed
and transferred to Department No. 2. WIP on November 30 was 100% complete as to material
cost and 40% complete as to conversion costs. By what amount would the equivalent units for
conversion costs for the month of November differ if FIFO method were used instead of the
weighted average method? 4,000 decrease
21. A company produces white paint in bulk. On May 1, the mixing department, which has used a
weighted-average process costing system, had 12,000 unfinished gallons of paint in process
approximately 50% complete with regard to conversion costs. Materials are added at the
beginning of the process and yield a gallon of paint for each gallon of materials added to the
process. During the month of May, 100,000 gallons of material were added and 10,000, 80%
complete with regard to conversion, were in process at the end of May. What is the difference
in material and conversion equivalent units, respectively, incurred during May if the first-in,
first-out process costing method is employed, rather than the weighted average method?
Difference in Material Equivalent Units = 12,000 decrease
Difference in Conversion Equivalent Units = 6,000 decrease
22. The following data for the month of September were taken from the cost records of Department
I of Pro-life Products which uses process costing system:
Opening inventory of work-in-process:
Units – 500 (with all materials added and 50% of labor and overhead)
Cost - Materials ……………………………………………………………………………………….. P 2,400
Labor ………………………………………………………………………………………………. 1,500
Factory overhead ……………………………………………………………………………
760
Put into production:
Units – 5,000
Cost - Materials ……………………………………………………………………………………….. P25,100
Labor ………………………………………………………………………………………………. 19,380
Factory overhead …………………………………………………………………………… 14,900
Completed and transferred – 4,8000 units
Ending inventory of work-in-process:
Units – 700 (with all materials, and 60% of labor and overhead)
The cost per equivalent unit, order (rounded to nearest centavo): FIFO =11.92 ; Average = 12.00
23. Cost and statistics for Department 2 of a company manufacturing a single product in three
department follows:
Work-in-process, October 1:
Cost in Department 1 ………………………………………………………………………. P11,380
Cost in Department 2
Materials ……………………………………………………………………………..
None
Labor …………………………………………………………………………………….
P500
Factory overhead …………………………………………………………………
50
Cost in Department 2 in October
Materials ……………………………………………………………………………..
None
Labor ……………………………………………………………………………………. P13,000
Factory overhead …………………………………………………………………
450
Units in process, October 1, 60% completed
as to conversion cost …………………………………………………………..
500
Units received from Department 1 in October at P2.60 per unit ……..
6,700
Units completed and transferred to Department 3 in October ………...
6,800
Units in process, October 31, half completed
as to conversion cost ……………………………………………………………
400
Compute the conversion cost per equivalent unit (rounded to nearest centavo)
FIFO = 2.01; Average = 2.00
24. Wilson Company manufactures the famous ticktock watch on an assembly line basis. January 1,
work-in-process consisted of 5,000 units partially completed. During the month an additional
11,000 units were started and 105,000 units were completed, the ending work-in-process was
3/5 complete as to conversion costs. Conversion costs are added evenly throughout the process.
The following conversion costs were incurred.
Beginning costs for work-in-process ……………………………………………………….. P 1,500
Total current conversion costs ………………………………………………………………… 273,920
The conversion costs assigned to ending work-in-process totaled P15360 using the FIFO method
process costing. What was the percentage of completion, as to conversion costs on the 5,000
units in BWIP? 80%
25. Barnet Company adds materials at the beginning of the process in Department m. Conversion
costs were 75% complete as to the 8,000 units in WIP at May 1 and 50% complete as to 6,000
units in WIP at May 31. During May, 12,000 units were completed and transferred to the next
department. An analysis of the costs relating to WIP at May 1 and to production activity for May
is as follows:
Costs
Materials
Conversion
WIP, May 1 ……………………………………….. P 9,600
P 4,800
Costs added in May …………………………… 15,600
14,400
Total cost per equivalent unit for May was: FIFO = 3.16; Average = 2.68
26. Given for a certain process:
Beginning work in process, 2/5 completed …………………………………………………….
Transferred in …………………………………………………………………………………………………
Normal spoilage ……………………………………………………………………………………………..
Abnormal spoilage ………………………………………………………………………………………….
Goods completed and transferred out ……………………………………………………………
Ending work in process, 1/3 completed …………………………………………………………
Conversion costs in beginning inventory ………………………………………………………..
Current period conversion costs ……………………………………………………………………..
500 units
2,000 units
200 units
300 units
1,700 units
300 units
P 610
P 3,990
All spoilage occurs at the end of the process. The conversion cost per equivalent unit amounted
to: FIFO Method = 1.90; Average Method = 2.00
27. Using the same information in No. 26, the conversion costs components of normal spoilage:
FIFO Method = 380; Average Method = 400
28. Using the same information in No. 26, the conversion costs components of normal spoilage:
FIFO Method = 570; Average Method = 600