h a n g e Pro h a n g e Pro

XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Process
Costing
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Nature of Process Costing

This is used by companies with continuous mass production of similar
products through several processes or departments.
Each department performs a specific operation or process leading to the
completion of the product and in each department, materials, labor, and
overhead inputs may be needed, and each unit is assumed to receive the
same amount of materials, labor, and overhead.
Upon completion of a particular processing, the partially completed goods are
transferred to another process or department.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Nature of Process Costing

The elements of costs: Materials, Labor, and Overhead may be applied
uniformly throughout the production process or at different stages of
production.
The methods of assigning costs to each product may either be FIFO method
or Weighted Average method.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Distinction between Job Order

and Process Costing
Features Job Order Cost System
Usage Used by the companies
producing small number of
products in batches
WIP account One for multiple jobs
Documents used Job cost sheets
Determination of total Each job
manufacturing cost
Unit cost computation Cost of each job/units produced
for the job
Process Cost System
Used by companies that produce
large volume of identical
products in a continuous flow
One for each department
Cost of production report
Each period through series of
manufacturing processes or
departments
Total manufacturing costs/units
produced
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

FIFO method and Weighted

Average method
FIFO method: assumes that units in the beginning inventory are
completed first, before any units are started in the process
resulting to the accounting of units in the beginning inventory
separate from the newly started units.
Weighted Average method: averages the cost of units in the
beginning inventory with the cost of units that were started during
the period.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Cost of Production Report

Key documents used in a process cost system

It provides information about the number of units and manufacturing costs that flow through a
production process during an accounting period.

It is used to determine also the number of units completed and transferred to the next
department together with the cost attached to the completed and partially completed units.

This report also gives the accountant information on what to record in the books.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Five Steps to Prepare a Cost of

Production Report
Step 1. Calculate the total units to account.

Prepare a quantity schedule (the physical flow of units) to determine the total units to be accounted for. These units
are then accounted by the output of the period, which consists of the units transferred out, unit in process at the end
of the period, and units spoiled or lost during the process.
Beginning inventory, in units 000
Add: Units started or transferred in 000
Total units to account 000

Accounted as follows:
Units completed or transferred to the 000
next department
Ending inventory, in units 000
Lost units 000
Total units as accounted 000
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Five Steps to Prepare a Cost of

Production Report
Step 2. Compute the equivalent units of production.

Equivalent units of production are an approximation of the number of whole units of output that could have been
produced during the period.

EUPs are calculated by multiplying the number of actual but incomplete units produced by the degree of completion
or work done during the period. It measures the work done during a period, expressed in fully completed units.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Five Steps to Prepare a Cost of

Production Report
Step 2. Compute the equivalent units of production.
Weighted Average: Beginning inventory and current production is combined
Units transferred out (or units completed) 000
Add: Ending inventory x % of work done this period 000
Total EUP 000

FIFO method: The beginning inventory is accounted separate from the current production
Alternatively:
F&T:
Weighted Average in EUP 000
BI x % work done this period 000
Less: EUP of In process, beginning 000
Units started and complete: 100% 000
FIFO, EUP 000
EI x % work done 000
Total EUP 000
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Five Steps to Prepare a Cost of

Production Report
Step 3. Find the total costs to account.

The total costs to account include the balance of Work in Process at the beginning plus all current costs added during
the period. In the second department, the total costs to account is computed as:

Cost of beginning inventory P000

Add: Cost added in the current
period
Materials, labor, & overhead P000
Transferred in costs 000 000
Total costs to account P000
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Five Steps to Prepare a Cost of

Production Report
Step 4. Compute the unit cost per EUP

Unit production costs are costs expressed in terms of equivalent units of production. When the EUP are different for
materials, labor, and overhead, then three unit costs must be computed.

Weighted Average:
Beginning costs + Current Costs
Unit cost =
EUP (per cost element)

FIFO method:
Current costs
Unit cost =
EUP (per cost element)
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Five Steps to Prepare a Cost of

Production Report
Step 5. Assign costs to inventories

Assign the total production costs to units completed and in process at the end of a period.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Single department – Weighted Average

(materials added at the end of the process)
Consider the following data for Viva Manufacturing Company:

Viva Manufacturing Company adds materials at the end of the process. The work in process beginning is 60% converted while work in process at the
end is 40% converted. Viva Manufacturing Company used the Weighted Average method of process costing.

Required:

1. Determine the equivalent units of production (EUP) for each cost element and compute the cost per EUP.

2. Assign the cost to Finished & Transferred and WIP, end.

3. Give the journal entries required to record the above.

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Solution:
1. Equivalent units of production and unit cost computation
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Solution:
Cost per EUP = (WIP, beginning costs + current costs) / EUP
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Solution:
2. Assignment of costs to F&T and WIP, end
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Solution:
3. Journal entries
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Single Department – FIFO method

(materials added at the end of process)
Consider the following data for Viva Manufacturing Company:

Viva Manufacturing Company adds materials at the end of the process. The work in process beginning is 60% converted while work in process at
the end is 40% converted. Viva Manufacturing Company used the FIFO method of process costing.

Required:

1. Determine the equivalent units of production (EUP) for each cost element and compute the cost per EUP.

2. Assign the cost to Finished & Transferred and WIP, end.

3. Give the journal entries required to record the above.

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Solution:
1. Equivalent units of production and unit cost computation
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Solution:
Cost per EUP = Current cost / EUP
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Solution:
2. Assignment of costs to F&T and WIP, end
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Solution:
3. Journal entries
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Single department – Weighted Average

(materials are added at the beginning of the process)
Barnet Company adds materials at the beginning of the process in Department M. It uses the weighted average method of
process costing. Work in process at the beginning were 8,000 units (75% complete) and Work in process at the ending were
6,000 units (50% complete).
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:

Required:
1. Determine the equivalent units of production (EUP) for each cost element and compute the cost per EUP.
2. Assign the cost to Finished & Transferred and WIP, end.

3. Give the journal entries required to record the above.

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Solution:
Beginning inventory, in units (Step 6) 8,000
Add: Units started or transferred in (Worked Back – Step 7) 10,000
Total units to account (Step 5) 18,000

Accounted as follows:
Units completed or transferred to the next (Step 2) 12,000
department

Ending inventory, in units (Step 1) 6,000

Lost units 0
Total units as accounted (Step 3) 18,000
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Solution:
1. Equivalent units of production and unit cost computation
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Solution:
Cost per EUP = (Beginning inventory costs + current costs) / EUP
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Solution:
2. Assignment of costs to F&T and WIP, end
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Solution:
3. Journal entries
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Single department – FIFO method

(materials are added at the beginning of the process)
Barnet Company adds materials at the beginning of the process in Department M. It uses the FIFO method of process costing.
Work in process at the beginning were 8,000 units (75% complete) and Work in process at the ending were 6,000 units (50%
complete).
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:

Required:
1. Determine the equivalent units of production (EUP) for each cost element and compute the cost per EUP.
2. Assign the cost to Finished & Transferred and WIP, end.

3. Give the journal entries required to record the above.

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Solution:
1. Equivalent units of production and unit cost computation
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Solution:
Cost per EUP = Current costs / EUP
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Solution:
2. Assignment of costs to F&T and WIP, end
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Solution:
3. Journal entries
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Multiple department – Weighted Average

Cutting department – First department

Before recording the costs of the units transferred out to the Assembly department, the Work in Process – Cutting
department in the general ledger shows a balance of P351,294 on February 28, 2014 as shown below:
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Multiple department – Weighted Average

Cutting department – First department (cont.)
The balance of 351,294 is broken down into cost categories as follows:
The cost last month (January) of the beginning work in process is broken down as follows:

The cost incurred in the current month (February) for each category per work in process postings above are:
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Multiple department – Weighted Average

Cutting department – First department (cont.)

The production report for the month of February is shown below.

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Multiple department – Weighted Average

Cutting department – First department (cont.)

Required:

1. Determine the equivalent units of production (EUP) for each cost element and compute the cost per EUP.

2. Assign the cost to Transferred out to next department and WIP, end.

3. Give the journal entries required to record the above.

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

1. Determine the equivalent units of production (EUP) for each cost element and compute the cost per EUP.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

1. Determine the equivalent units of production (EUP) for each cost element and compute the cost per EUP.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

2. Assign the cost to Transferred out to next department and WIP, end.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

3. Give the journal entries required to record the above.

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Multiple department – Weighted Average

Assembly – Second department (after Cutting department)

On February 28, the Work in Process – Assembly Department account has the following available cost data. The data
include the following:
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Multiple department – Weighted Average

Assembly – Second department (after Cutting department) – cont.

The production report for the month of February is presented below:

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Multiple department – Weighted Average

Assembly – Second department (after Cutting department) – cont.

Required:

1. Determine the equivalent units of production (EUP) for each cost element and compute the cost per EUP.

2. Assign the cost to Transferred out to next department and WIP, end.

3. Give the journal entries required to record the above.

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

1. Determine the equivalent units of production (EUP) for each cost element and compute the cost per EUP.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

1. Determine the equivalent units of production (EUP) for each cost element and compute the cost per EUP.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

2. Assign the cost to Transferred out to next department and WIP, end.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

3. Give the journal entries required to record the above.

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Multiple department – Weighted Average

Packaging – Third department (after Assembly department)

The cost data for the month of January and February are as follows:
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Multiple department – Weighted Average

Packaging – Third department (after Assembly department) – cont.

The production report for the month of February is presented below:

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Multiple department – Weighted Average

Packaging – Third department (after Assembly department) – cont.

Required:

1. Determine the equivalent units of production (EUP) for each cost element and compute the cost per EUP.

2. Assign the cost to Transferred out to next department and WIP, end.

3. Give the journal entries required to record the above.

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

1. Determine the equivalent units of production (EUP) for each cost element and compute the cost per EUP.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

2. Assign the cost to Transferred out to next department and WIP, end.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

3. Give the journal entries required to record the above.

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Multiple department – FIFO method

Cutting department – First department

Before recording the costs of the units transferred out to the Assembly department, the Work in Process – Cutting
department in the general ledger shows a balance of P351,294 on February 28, 2014 as shown below:
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Multiple department – FIFO method

Cutting department – First department (cont.)
The balance of 351,294 is broken down into cost categories as follows:
The cost last month (January) of the beginning work in process is broken down as follows:

The cost incurred in the current month (February) for each category per work in process postings above are:
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Multiple department – FIFO method

Cutting department – First department (cont.)

The production report for the month of February is shown below.

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Multiple department – FIFO method

Cutting department – First department (cont.)

Required:

1. Determine the equivalent units of production (EUP) for each cost element and compute the cost per EUP.

2. Assign the cost to Transferred out to next department and WIP, end.

3. Give the journal entries required to record the above.

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

1. Determine the equivalent units of production (EUP) for each cost element and compute the cost per EUP.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

1. Determine the equivalent units of production (EUP) for each cost element and compute the cost per EUP.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

2. Assign the cost to Transferred out to next department and WIP, end.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

3. Give the journal entries required to record the above.

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Multiple department – FIFO method

Assembly – Second department (after Cutting department)

On February 28, the Work in Process – Assembly Department account has the following available cost data. The data
include the following:
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Multiple department – FIFO method

Assembly – Second department (after Cutting department) – cont.

The production report for the month of February is presented below:

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Multiple department – FIFO method

Assembly – Second department (after Cutting department) – cont.

Required:

1. Determine the equivalent units of production (EUP) for each cost element and compute the cost per EUP.

2. Assign the cost to Transferred out to next department and WIP, end.

3. Give the journal entries required to record the above.

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

1. Determine the equivalent units of production (EUP) for each cost element and compute the cost per EUP.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

1. Determine the equivalent units of production (EUP) for each cost element and compute the cost per EUP.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

2. Assign the cost to Transferred out to next department and WIP, end.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

3. Give the journal entries required to record the above.

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Multiple department – FIFO method

Packaging – Third department (after Assembly department)

The cost data for the month of January and February are as follows:
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Multiple department – FIFO method

Packaging – Third department (after Assembly department) – cont.

The production report for the month of February is presented below:

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

Illustration: Multiple department – FIFO method

Packaging – Third department (after Assembly department) – cont.

Required:

1. Determine the equivalent units of production (EUP) for each cost element and compute the cost per EUP.

2. Assign the cost to Transferred out to next department and WIP, end.

3. Give the journal entries required to record the above.

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

1. Determine the equivalent units of production (EUP) for each cost element and compute the cost per EUP.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

1. Determine the equivalent units of production (EUP) for each cost element and compute the cost per EUP.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

2. Assign the cost to Transferred out to next department and WIP, end.
 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

SOLUTION:

3. Give the journal entries required to record the above.

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

REFERENCES:
Dayag, A.J. (2015). Practical Accounting 2015 Edition. GIC Enterprises & Co., Inc.

Guerrero, P.P. (2014). Principles and Procedural Applications. GIC Enterprises & Co., Inc.

Rante, G.A. (2016). Cost Accounting. Millenium Books, Inc.

 h a n g e Pro h a n g e Pro
XC d XC d
F- F-

uc

uc
PD

PD
!

!
W

W
t

t
O

O
N

N
y

y
bu

bu
to

to
ww

ww
om

om
k

k
lic

lic
C

C
.c

.c
w

w
tr re tr re
.

.
ac ac
k e r- s o ft w a k e r- s o ft w a

THANK YOU.