05.16.

2023 Activity (ASSIGNMENT) – PROCESS COSTING WITH ANSWER KEY

Instruction: Answer the following problems. This is for you to practice problems for process costing.
You may ask help from your friends but I advise you do it first and when in doubt then you may call a
friend. Make sure also to click submit button after attaching your answer.

P1. Cost of Production Report. FM Corporation manufactures a product that is processed in two departments:
Mixing and Cooking. At the beginning and end of July, there were no inventories of unfinished work. During July,
50,000 units of this product were completed. Materials used during July cost P28,000, of which one half were used
in the Mixing Department and one half were used in the Cooking Department. Direct labor wages totaled P60,000,
with P40,000 applicable to Mixing and P20,000 to Cooking. The amounts for direct factory overhead incurred for
each department and for general factory overhead apportioned to each department were:

Mixing Cooking

Department Department

Factory overhead incurred............................................................................... P7,500 P9,000

General factory overhead apportioned........................................................... 5,000 6,000

Required: Prepare a partial cost of production report, showing the total cost to be accounted for in each
department.
P2. Computation of Equivalent Production. Honey Company uses process costing to account for the costs of its
only product, X. Production takes place in two departments Sanding and Polishing. On December 31, the inventory
for Product X was as follows:

No unused materials

Work in process

Sanding Department............................................. 800 units (3/4 complete as to labor)

Work in process

Polishing Department............................................ 1,000 units (1/2 complete as to materials and

3/4 complete as to direct labor)

Finished Goods.............................................................. 600 units

Required:

(1) Compute the equivalent units of materials in all inventories combined at December 31.
(2) Compute the equivalent units of the Sanding Department's direct labor in all inventories at
December 31.
P3. Calculation of Unit Costs Average Costing Method. Bogart 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).................................................................................................................... 5,000

Units started in process............................................................................................................................. 35,000

Units transferred out................................................................................................................................. 33,000

Units still in process (all materials; 1/2 labor and factory overhead)....................................................... 5,000

Units completed but not yet transferred to Finished Goods.................................................................... 2,000

Related data were:

Work in Process at Added During

Beginning of Period Period

Materials............................................................................................... P100,000 P 304,000

Labor..................................................................................................... 125,400 407,100

Factory overhead.................................................................................. 173,500 407,750

Total.............................................................................................. P398,900 P 1,118,850

Required: Using the average costing method:

(1) Compute the unit cost for materials, labor, and factory overhead.

(2) Determine the cost of the work in process ending inventory.

P4. Journal Entries for Process Cost System. Xavier Corporation uses process costing in its two production
departments. A separate work in process account is kept in the general ledger for each production department.
The following data relate to operations for the month of May:

Beginning Added

Inventory During May

Direct materials cost: Department A P 5,000 P25,000

Department B 3,000 20,000

Direct labor cost: Department A 6,000 40,000

Department B 4,500 35,000

Applied overhead: Department A 12,000 90,000

Department B 4,500 35,000

During May, 45,000 units with a cost of P5 each were transferred from Department A to Department B, and 40,000
units with a cost of P9 each were transferred from Department B to finished goods inventory.

Required: Prepare the appropriate general journal entries to record the cost charged to the producing
departments during May and the cost of units transferred from Department A to Department B and Department B
to finished goods inventory.
JOB-ORDER & PROCESS COSTING

1. Robert Company is using a job-order cost system. The following debits (credit) appeared in Robert's
work in process account for the month of April 2022:

April Description Amount

1 Balance P 4,000

30 Direct materials 24,000

30 Direct manufacturing labor 16,000

30 Factory overhead 12,800

30 To finished goods (48,000)

Robert applies overhead to production at a predetermined overhead rate of 80% of direct

manufacturing labor costs. Job no. 5, the only job still in process on April 30, 2022, has been charged
with direct manufacturing labor of P 2,000. What was the amount of direct materials charged to Job no.
5?

a.P3,000 b. P 5,200 c. P 8,800 d. P 24,000

2. In a job cost system, manufacturing overhead is

An indirect cost of jobs A necessary element in production

a. No Yes
b. No No
c. Yes Yes
d. Yes No

3. Under PAK Co.’s job order costing system manufacturing overhead is applied to work in process using
a predetermined annual overhead rate. During January 2023, PAK’s transactions included the following:

Direct materials issued to production P 90,000

Indirect materials issued to production 8,000

Manufacturing overhead incurred 125,000

Manufacturing overhead applied 113,000

 Direct labor costs 107,000

PAK had neither beginning nor ending work in process inventory. What was the cost of jobs completed
in January 2023?

a. P 302,000 b. P 310,000 c. P 322,000 d. P 330,000

4. A direct manufacturing labor overtime premium should be charged to a specific job when the
overtime is caused by the

a. Increased overall level of activity

b. Customer’s requirement for early completion of job.

c. Management’s failure to include the job in the production schedule.

d. Management’s requirement that the job be completed before the annual factory vacation closure.

5. A company services office equipment. Some customers bring their equipment to the company’s
service shop; other customers prefer to have the company’s service personnel come to their offices to
repair their equipment. The most appropriate costing method for the company is

a. A job order costing system

b. An activity-based costing system

c. A process costing system

d. An operating costing system

6. FIFO equivalent unit production (EUP) is 6,200 units. EUP in ending inventory is 300, in beginning
inventory it is 125. Weighted-average EUP is

a. 6,500

b. 6,325

c. 6,025

d. 5,900

7. Weighted-average EUP is 4,100 units. Cost incurred during the period are $11,250, and the beginning
inventory was $2,150. Unit cost is
 a. $3.268

b. $2.744

c. $2.220

d. $0.524

8. Alona completed 10,000 units, had beginning inventory of 2,500 units 40% complete, and ending
inventory of 1,000 units 20% complete. Weighted-average EUP was

a. 9,200

b. 10,000

c. 10,200

d. 11,000

9. Scooter Corp had no beginning inventories, finished 40,000 units, and sold 36,000 units. There were
no ending inventories of materials or work in process. Materials purchased and used were
$225,000; direct labor and overhead were $170,000. Ending inventory would be valued at

a. $17,000

b. $22,500

c. $39,500

d. some other number

10. Cly uses weighted-average process costing. It had the following results in July.

Beginning inventory, 60% complete 2,000 units

Units completed 10,000 units

Units in ending inventory, 40% complete 1,000 units

Cost of beginning inventory $21,000

Current period production costs $166,200

a. Compute the equivalent unit production for July.

b. Compute the unit cost for July.

 c. Compute the ending inventory of work in process.

d. Compute the cost transferred to finished goods.

SOLUTION:

a. 10,400 [10,000 + (1,000 x 40%)]

b. $18 [($21,000 + $166,200)/10,400]

c. $7,200 (1,000 x 40% x $18)

d. $180,000 (10,000 x $18)

11. Nicky Company uses FIFO process costing. Data are as follows:

Beginning inventory 40% complete 5,000 units

Units completed during period 100,000 units

Ending inventory 70% complete 9,000 units

The cost of the beginning inventory was $2,900 and current period production costs were $166,880.

a. Compute equivalent production.

b. Compute the unit cost.

c. Compute the cost of the ending inventory of work in process.

d. Compute the cost of goods completed and transferred to finished goods inventory.

SOLUTION:

a. 104,300 [100,000 + (9,000 x 70%) - (5,000 x 40%)]

b. $1.60 ($166,880/104,300)

c. $10,080, (9,000 x 70% x $1.60)

d. $159,700

Beginning inventory $ 2,900

Finish beginning inventory (5,000 x 60% x $1.60) 4,800

Units started and completed during period (95,000 x $1.60) 152,000

------------

Total $159,700

========

12. The entry to apply overhead in a job-order system is

a. debit Cost of Goods Sold, credit Manufacturing Overhead.

b. debit Finished Goods Inventory, credit Work-in-Process Inventory.

c. debit Work-in-Process Inventory, credit Manufacturing Overhead.

d. debit Work-in-Process Inventory, credit Direct Labor.

13. Which item is NOT relevant in determining FIFO equivalent unit production?

a. Cost of beginning inventory.

b. Equivalent unit production in beginning inventory.

c. Equivalent unit production in ending inventory.

d. Units completed.

14. The FIFO method of calculating equivalent production and unit costs

a. is less likely to be accurate than the weighted-average method.

b. is more useful for control purposes than the weighted-average method.

c. cannot be used unless a company also uses standard costing.

d. eliminates the need to calculate separate equivalent-production numbers for each element of
manufacturing cost.

15. Chewy Company had a beginning inventory of 3,000 units 35% complete, and an ending inventory of
2,500 units 20% complete. If 17,500 units were completed, weighted-average EUP is
 a. 17,500

b. 18,000

c. 18,550

d. 20,000

16. Which formula gives weighted-average equivalent unit production? (UC = units completed, BI =
equivalent units in beginning inventory, EI = equivalent units in ending inventory)

a. UC + BI + EI

b. UC + BI - EI

c. UC + EI - BI

d. UC + EI

17. Which formula gives FIFO equivalent unit production? (UC = units completed, BI = equivalent units in
beginning inventory, EI = equivalent units in ending inventory)

a. UC + BI + EI

b. UC + BI - EI

c. UC + EI - BI

d. UC + EI

18. The entry to apply overhead in a job-order system is

a. debit Cost of Goods Sold, credit Manufacturing Overhead.

b. debit Finished Goods Inventory, credit Work-in-Process Inventory.

c. debit Work-in-Process Inventory, credit Manufacturing Overhead.

d. debit Work-in-Process Inventory, credit Direct Labor.

19. Weighted-average equivalent production is always

a. less than the number of units completed.

b. equal to the number of units completed.

 c. equal to or greater than the number of units completed.

d. any of the above.

29. FIFO equivalent production can be

a. less than the number of units completed.

b. equal to the number of units completed.

c. equal to or greater than the number of units completed.

d. any of the above.

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