Process Costing Handout and Additional Problems PDF

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Summary

Process CostingProblem 1. Cosmopolitan Inc. adds materials at the start of the process. The following information is available for the month of December 20 20 :Work-in-process, 12/1/20 20 (35% complete as to conversion cost)700Units completed in December 1, Work-in-process, 12/31/20 20 (30% incomple...

Description

Process Costing Problem 1. Cosmopolitan Inc. adds materials at the start of the process. The following information is available for the month of December 2020: Work-in-process, 12/1/2020 (35% complete as to conversion cost) Units completed in December Work-in-process, 12/31/2020 (30% incomplete as to conversion cost)

700 1,900 800

Compute the equivalent units of production for the month of December 2020? FIFO a. b. c. d.

Materials 2,700 2,000 2,700 2,000

Conversion 2,915 1,895 2,595 2,215

Weighted Average Materials Conversion 3,400 3,160 2,700 2,140 3,400 2,840 2,700 2,460

Weighted Average Method: Units in Process, Beg, 700 Add: Units Started 2,000 Units to be accounted 2,700

Units completed in December Work-in-process, 12/31/2020 Total units accounted for

Units

Work Done

EUP Materials

Work Done

EUP Conversion

1,900

100%

1,900

100%

1,900

800

100%

800

70%

560

2,700

2,700

2,460

(From Average to FIFO)

EUP, Weighted Average Less: Work done last month on Work-in-process, beg EUP, FIFO

(700*100%)

Materials

Conversion

2,700

2,460

700 2,000

(700*35%)

245 2,215

Problem 2. Mojito Inc. uses process costing to account for the production of its beers. Units of product are started in the Fermentation Department and then transferred to the Filtration Department. In both departments, units are inspected at the 70% stage of conversion. In the Fermentation process, materials are added at the start of processing while in the Filtration process, all materials are added after inspection point. The normal loss cannot exceed 5% of the units started or received from prior department. Production data are as follows: Fermentation Filtration Beginning Inventory/ Stage of 8,000 / 90% 10,000 completion Ending inventory / Additional work 10,000 / 10% 16,000 required Transferred out ? 32,000

(workback) Compute the units started in the Fermentation Department during the month a. 44,000 b. 36,000 c. 50,000 d. 46,000

Compute the equivalent units of production of the Fermentation department using FIFO method FIFO Materials Conversion a. 58,000 55,800 b. 50,000 40,800 c. 50,000 48,600 d. 58,000 47,700 Transferred in, Filtration = Transferred Out, Filtration + In-Process, end + Lost Units – InProcess, beg. = 32000 + 16000 + 6,000 – 10000 =44,000 Transferred in, Filtration = Transferred Out, Fermentation Started, Fermentation = Transferred out, Fermentation + In-Process, end + Lost units – InProcess, beg. =44000 - 8,000 + 10,000 + 4,000 =50,000

Normal loss = 50,000 * 5% = 2,500 Abnormal loss = 4,000 – 2,500 = 1,500 Fermentation Department:

Work Done

Materials

Work Done

Conversion

Beginning WIP Started and Completed this month

8,000

0%

-

10%

800

36,000

100%

36,000

100%

36,000

Ending WIP

10,000

100%

10,000

90%

9,000

Normal Loss

2,500

100%

2,500

70%

1,750

Abnormal Loss Total Units Accounted For

1,500

100%

1,500

70%

1,050

58,000

50,000

Problem 3. The following information is available for Daiquiri Company for April: Started this month 80,000 units Beginning WIP (60% unconverted) 7,500 units Normal spoilage (discrete) 1,100 units Ending WIP (70% done) 13,000 units Transferred out 72,500 units Beginning Work in Process Costs: Material Conversion

P 10,400 13,800

48,600

Current Costs: Material Conversion

P120 000 350,000

All materials are added at the start of production and the inspection point is at the end of the process. (Use 2 decimal places)

Compute the cost assigned to ending inventory using the more accurate method representing the physical flow of units (FIFO) a. P55,939 b. P56,420 c. P58,994 d. P59,722 Compute the total cost assigned to goods transferred out using weighted average a. P409,216 b. P423,400 c. P429,824 d. P435,080 Beginning WIP Started this month Total units to account for

7,500 80,000 87,500

Started and completed this month = Transferred out - Beginning WIP = 72,500-7500 = 65,000

FIFO Method: Beginning WIP Started and Completed this month Ending WIP Normal Loss Abnormal Loss Total Units Accounted For

7,500 65,000 13,000 1,100 900 87,500

Work Done 0% 100% 100% 100% 100%

Materials 65,000 13,000 1,100 900 80,000

Work Done 60% 100% 70% 100% 100%

Conversion 4,500 65,000 9,100 1,100 900 80,600

cost/eup Materials= 120,000/80,000 = 1.5 cost/eup Conversion= 350,000/80,600 = 4.34 Cost of ending WIP= (13,000*1.5) + (9,100*4.34) = 58,994

EUP, FIFO Add: Work done last month on beg. WIP EUP, WA

Materials 80,000 7,500*100%

7,500 87,500

cost/eup Materials=(120,000+10,400)/87,500=1.49 cost/eup Conv =(350,000+13,800)/83,600=4.35 Cost of transferred out: Materials 72,500*1.49 = Conversion 72,500 *4.35 = Normal loss 1100* (1.49+4.35)=

108,025 315,375 6,424 429,824

Conversion 80,600 7,500*40%

3,000 83,600...