PROCESS COSTING
- products are identical
- cost of production report (CPR):
UTAF
UAF
Units to Account For
Units Accounted For
EUP
CTAF
Cost / EUP
Equivalent Units of Production
Cost to Account For
Cost per EUP (unit cost)
CAF
Cost Accounted For
2 Methods:
FIFO
(icocontinue until matapos ang 100%)
Weighted Average
EXAMPLE
Cost Data:
WIP, Aug. 1:
WIP, Aug. 1
Cost added this month:
WIP, beg. + Started in production this month
(bring back progress to 0% and incur 100% cost hanggang mafinish at the end of the period)
The difference lies in the treatment in the WIP beg.
Materials
Conversion Costs
Materials
Conversion Costs
20,800
27,600
240,000
640,800
Production Data:
WIP, Aug. 1 (40% complete)
Started in production this August
3,750 units
40,000 units
Transferred out
WIP, Aug. 31 (70% complete)
Normal lost units
Abnormal lost units
36,250 units
6,500 units
550 units
?
Total Beg.
WIP
UTAF
All materials are added at the start of the process and lost units are detected at the inspection point of 75% completion.
1. FIFO
UTAF = UAF
UTAF = 3,750 + 40,000
UTAF = 43,750
UAF:
Transferred Out
Units
Mats.
3,750
32,500
6,500
550
450
43,750
(WIP, beg.)
Started
WIP, end
Normal Spoilage
Abnormal Spoilage (Squeezed)
EUP
0%
100%
100%
100%
100%
CC
0
32,500
6,500
550
450
40,000
COST/EUP
FIFO
COST/EUP
0.00
- Materials
Cost of materials added this month / EUP
- Conversion Costs
Cost of conversion added this month / EUP
(orange cell highlights the diff. bet FIFO and WIP)
Q1: Using the FIFO method, what are the cost assigned to units transferred out and units in ending WIP?
Computation:
EUP - Mats.
EUP - CC
Transferred out
0
0
0
Normal spoilage
0
0
Beg. WIP
20,800
27,600
TOTAL
Total
20,800
27,600
48,400
EUP - Mats.
Ending WIP
0
Transferred out
Ending WIP
48,400
0
EUP - CC
0
0
EUP
60%
100%
70%
75%
75%
2,250
32,500
4,550
412.50
338
40,050
0.00
2. WIP
UAF:
Units
Mats.
EUP
CC
EUP
UTAF = UAF
UTAF = 3,750 + 40,000
Transferred Out
WIP, end
36,250
6,500
100%
100%
36,250
6,500
100%
70%
36,250
4,550
UTAF = 43,750
Normal Spoilage
550
100%
550
75%
412.50
450
43,750
100%
450
43,750
75%
337.50
41,550
Abnormal Spoilage (Squeezed)
COST/EUP
COST/EUP
5.96
Weighted Average
- Materials
(WIP, beg. + Cost of materials added this month) / EUP
- Conversion Costs
(WIP, beg. + Cost of conversion added this month / EUP
Q2: Using the Weighted Average method, what are the cost assigned to units transferred out and units in ending WIP?
Computation:
Transferred out
EUP - Mats.
216,091
EUP - CC
583,141
Normal spoilage
3,279
6,636
219,370
589,777
Total
TOTAL
809,147
(WIP, beg. is not added since it was already added in the COST/EUP
Ending WIP
Transferred out
809,147
EUP - Mats.
38,747
Ending WIP
111,942
EUP - CC
73,194
111,942
16.09
Q3: What is the cost of abnormal units?
FIFO
Weighted Average
EUP - Mats.
EUP - CC
TOTAL
Abnormal spoilage
0
0
0
Abnormal spoilage
2,683
5,429
8,112