1. Process Costing Sample Problem solution PDF

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SAMPLE PROBLEMS:PROCESS COSTINGPROBLEM 1Dover Corporation's production cycle starts in the Mixing Department. The following information is available for April: Units Work in process, April 1 (50% complete) 40, Started in April 240, Work in process, April 30 (60% complete) 25,Materials are added at t...

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SAMPLE PROBLEMS: PROCESS COSTING PROBLEM 1 Dover Corporation's production cycle starts in the Mixing Department. The following information is available for April: Units Work in process, April 1 (50% complete) 40,000 Started in April 240,000 Work in process, April 30 (60% complete) 25,000 Materials are added at the beginning of the process in the Mixing Department. Using the average cost method, what are the equivalent units of production for the month of April? SOLUTION: Using WAVE Method: Conversion Costs WD EP

Materials Units to account for: WIP, beginning Started

Actual 40,000 units 240,000 units 280,000 units

WD

Completed & Transferred WIP, ending

255,000 units 25,000 units 280,000 units

100% 100%

EP

255,000 units 25,000 units 280,000 units

100% 60%

255,000 Units 15,000 units 270,000 units

Computation of Completed and Transferred= 280,000- 25,000= 255,000 units PROBLEM 2 Information concerning Department A of Neeley Company for June is as follows:

Units Beginning work in process Started in June Units completed Ending work in process

Materials Costs 17,000 ₱ 12,800 82,000 69,700 85,000 14,000

All materials are added at the beginning of the process. Using the average cost method, the cost per equivalent unit for materials is: SOLUTION: Using WAVE Method: Materials Units to account for: WIP, beginning Started

Actual 17,000 units 82,000 units 99,000 units

WD

Completed & Transferred WIP, ending

85,000 units 14,000 units 99,000 units

100% 100%

EP

85,000 units 14,000 units 99,000 units

Cost/EUP (as to materials) = (₱ 12,800 + ₱ 69,700)/ 99,000 units = ₱ 0.83 per unit PROBLEM 3 Simpson Co. adds materials at the beginning of the process in Department M. The following information pertains to Department M's work in process during April: Units Work in process on April 1 (60% complete as to conversion cost) 3,000 Started in April 25,000 Completed in April 20,000 Work in process on April 30 (75% complete as to conversion cost)............................................ 8,000 Under the average costing method, the equivalent units for conversion cost are: SOLUTION: Using WAVE Method: Conversion Costs WD EP

Materials Units to account for: WIP, beginning Started

Actual 3,000 units 25,000 units 28,000 units

WD

Completed & Transferred WIP, ending

20,000 units 8,000 units 28,000 units

100% 100%

EP

20,000 units 8,000 units 28,000 units

100% 75%

20,000 units 6,000 units 26,000 units

PROBLEM 4 Kennedy Company adds materials in the beginning of the process in the Forming Department, which is the first of two stages of its production cycle. Information concerning the materials used in the Forming Department in October is as follows:

Units Work in process, October 1 Units started Units completed and transferred out

Materials Costs 6,000 ₱ 3,000 50,000 25,560 44,000

Using the average cost method, what was the materials cost of work in process at October 31? SOLUTION: Using WAVE Method: Materials Units to account for: WIP, beginning Started

Actual 6,000 units 50,000 units 56,000 units

WD

Completed & Transferred WIP, ending

44,000 units 12,000 units 56,000 units

100% 100%

EP

44,000 units 12,000 units 56,000 units

Cost/EUP (as to materials) = (₱ 3,000+₱ 25,560 )/ 56,000 units = ₱ 0.51 per unit

Cost of WIP, ending = 12,000 units x ₱ 0.51

= ₱ 6,120

PROBLEM 5 Barcelona Beach Products reports the following data for the first department in its production process: Units in process at beginning of period (all materials; 3/4 labor and factory overhead) Units started in process Units transferred out Units still in process (all materials; 1/2 labor and factory overhead) Units completed but not yet transferred to Finished Goods

.... ...... ...... .. .. .. ..

5,000 35,000 33,000 5,000 2,000

Related data were: Work in Process at Beginning of Period Materials 304,000 Labor 407,100 Factory overhead 407,750 Total 1,118,850

Added During Period ₱ 100,000 125,400 173,500 ₱ 398,900

Required: Using the average costing method: (1) (2)

Compute the unit cost for materials, labor, and factory overhead. Determine the cost of the work in process ending inventory.

SOLUTION (1)

Materials: (₱ 100,000+ ₱ 304,000 ) / 40,000 units* = ₱ 10.10 per unit Labor: (₱ 125,400 + ₱ 407,100 ) / 37,500 units* = ₱ 14.20 per unit Factory overhead: (₱ 173,500+ ₱ 407,750) / 37,500 units = ₱ 15.50 per unit

*Equivalent production: Materials: 33,000 + 2,000 + 5,000 = 40,000 units Labor and factory overhead: 33,000+ 2,000 + ( 5,000x 1/2 ) = 37,500 units (2)

Units in process at end of period: Completed and on hand ( 2,000 x ₱ 39.80 )= ......................................... Materials ( 5,000 units x ₱ 10.10 ) = 50,500............................................ Labor ( 5,000 units x 1/2 x ₱ 14.20) = 35,500........................................ Factory overhead ( 5,000 units x 1/2 x ₱ 15.50 ) = 38,750...................... Ending Work In Process ₱...................................................... 204,350

₱

₱ 79,600

₱...