Module 13 14 15 ACCTG 31

KORBEL FOUNDATION COLLEGE, INC.
Purok Spring 1, Brgy. Morales, Koronadal City

Contact No. 228-1996/887-2051
Business Department
korbelbusinessdepartment@gmail.com
Lecturer: Charlou C. Calipayan A.Y. 2 ND SEMESTER, 2020-2021
SUBJECT CODE: ACCTG 31

MODULE NO: Module 13 - 15
SUBJECT NAME: COST ACCOUNTING AND CONTROL
TOPIC: Process Costing
OBJECTIVE/S:
At the end of the lecture/discussion/week, the student should be able to:

PART 1. LECTURE/DISCUSSION
CHAPTER 9
PROCESS COSTING
Process costing is a method of costing used mainly in manufacturing where units are continuously mass-produced
through one or more processes. Examples of this include the manufacture of erasers, chemicals or processed food.
In process costing it is the process that is costed (unlike job costing where each job is costed separately). The method
used is to take the total cost of the process and average it over the units of production.
Cost per unit = Cost of inputs
Expected output in units
Important terms to understand

In a manufacturing process the number of units of output may not necessarily be the same as the number of units of
inputs. There may be a loss.
Normal loss
This is the term used to describe normal expected wastage under usual operating conditions. This may be due to reasons
such as evaporation, testing or rejects.
Abnormal loss
This is when a loss occurs over and above the normal expected loss. This may be due to reasons such as faulty machinery
or errors by labourers.
Abnormal gain
This occurs when the actual loss is lower than the normal loss. This could, for example, be due to greater efficiency from
newly-purchased machinery.
Work in progress (WIP)

This is the term used to describe units that are not yet complete at the end of the period. Opening WIP is the number of
incomplete units at the start of a process and closing WIP is the number at the end of the process.
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Scrap value
Sometimes the outcome of a loss can be sold for a small value. For example, in the production of screws there may be a
loss such as metal wastage. This may be sold to a scrap merchant for a fee.
© 2011 ACCA
Equivalent units
This refers to a conversion of part-completed units into an equivalent number of wholly-completed units. For example, if
1,000 cars are 40% complete then the equivalent number of completed cars would be 1,000 x 40% = 400 cars. Note: If
1,000 cars are 60% complete on the painting, but 40% complete on the testing, then equivalent units will need to be
established for each type of cost. (See numerical example later.)
How to approach process accounting questions
Step 1 Draw up a T account for the process account. (There may be more than one process, but start with the first
one initially.) Fill in the information given in the question.
Process account
Units $ Units $
Opening WIP X X Normal loss X X
Materials X Transfer to X X
Process 2 or
Finished goods
Labour X Abnormal loss X X
Overheads X Closing WIP X X
Abnormal gain X X
Step 2 Calculate the normal loss in units and enter on to the Process account. (The value will
be zero unless there is a scrap value – see Step 4).
Step 3 Calculate the abnormal loss or gain (there won’t be both). Enter the figure on to the
Process account and open a T account for the abnormal loss or gain.
Step 4 Calculate the scrap value (if any) and enter it on to the Process account. Open a T
account for the scrap and debit it with the scrap value.
Step 5 Calculate the equivalent units and cost per unit.

Step 6 Repeat the above if there is a second process.
Note: Although this proforma includes both losses and WIP, the Paper F2/FMA syllabus specifically excludes situations
where both occur in the same process. Therefore, don’t expect to have to complete all of the steps in the questions.
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Normal loss example

Mr Bean’s chocolate Wiggly bars pass through two processes. The data for the month just ended are:
$ kg $
Process 1 Ingredients 5,000 4,000 Process 2 Packaging 10,000
Labour and 6,000 Labour and 9,000 overhead overhead
Mr Bean allows the staff to eat 5% of the chocolate as they work on Process 1. There was no work in progress at the
month end. Prepare the two process accounts and calculate the cost per kg.
Process 1 account
kg $ kg $
Ingredients 4,000 5,000 Normal loss (W1) 200
Labour and 6,000 Transfer to Process 2 3,800
overheads (W2) 11,000
4,000 11,000 4,000
11,000
Q = figure taken straight from the information given in the question.
Workings
(1) The staff normally eat 5% of the chocolate, so the normal loss is
4,000 x 5% = 200kg
There is no work in progress or scrap value or abnormal losses or gains, so we can now balance the account to
obtain the amounts transferred to Process 2.
(2) Number of kg transferred = kg input less normal loss = 4,000 – 200 = 3,800kg
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Process 2 account
kg $ kg $
Transfer from 3,800 11,000 Finished goods 3,800 30,000
Process 1 (above) (balancing figure)
Packaging 10,000
Labour and overheads 9,000
3,800 30,000 3,800 30,000
Cost per kg = Total costs = $30,000 = $7.89 per kg

Number of expected kg 3,800
Abnormal gain example

There is a heatwave and staff have eaten less chocolate. At the end of Process 1, 3,810 units are transferred to Process
2.
Process 1 account
kg $ kg $
Ingredients 4,000 5,000 Normal loss 200
Labour and overheads 6,000 Transfer to Process 2 3,810 11,029
(W2)
Abnormal gain (W1+2) 10 29
4,010 11,029 4,010 11,029
Workings
(1) As the T account should balance, the abnormal gain = 4,010kg – 4,000kg
= 10kg
(2) Cost per kg = Costs incurred = 11,000 = $2.89

Expected output in kgs 4,000 x 95%
Cost of units transferred to Process 2 = $2.89 3,810 = $11,029 (using $2.894736842 to avoid rounding
differences).
Cost of abnormal gain = $2.89 10 = $29.
[Remember to open an abnormal gain T account and credit it with $29] Process 2 account
kg $ kg $
Packaging 10,000
3,810 30,029 3,810 30,029
Cost per kg = $30,029 = $7.88/kg

3,810
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Scrap value example

Mr Bean can no longer afford to give his staff 5% of the bars. He decides to offer the bars to his staff at a discount. They
pay 40c for every kg that they eat. As a result of this, there is another abnormal gain of 10kg, so 3,810 units are
transferred to Process 2.
Process 1 account
kg $ kg $
Ingredients 4,000 5,000 Normal loss (W1) 200 80
Labour and 6,000 Transfer to Process 2 3,810 10,947
overheads
Abnormal gain
(11,000 – 80) / 10 27
4,000
4,010 11,027 4,010 11,027
Workings
Here we need to calculate the scrap value. The value of units transferred to Process 2 is a balancing figure.
(1) Number of kg of normal loss scrap amount per kg = 200 0.4 = $80
[Dr Scrap A/C $80, Cr Process A/C $80]
Be careful here! The scrap value also affects the abnormal gain or loss accounts. Since the staff didn’t eat the number of
bars that they were entitled to, the scrap value (the 40c per bar) is lower than 200 40c. In fact, it is 10 40c = $4 lower
(the abnormal gain). This needs to be reflected in the scrap account and the abnormal gain account.
Scrap account
Process 1 80 Abnormal gain 4
Bank 76
80 80
Abnormal gain A/C

Scrap A/C 4 Process 1 27
Income statement 23
27 27
Process 2 account
kg $ kg $
Packaging 10,000
3,810 29,947 3,810 29,947

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Cost per kg = $29,947 = 7.86/kg

3,810
Work in progress example

Assuming at the month end there are now part-completed bars (work-inprogress). Assuming also that he stopped
charging staff for the bars that they had eaten. The data for Process 2 was as follows:
Opening WIP $235 Materials (Ingredients) 100% 100kgs
$520 Labour and overheads 60%
Input $8,405 Materials

(Packaging) 3,500kgs
$6,200 Labour and
Transferred to finished goods 3,100kgs
overheads
Closing WIP Materials 100% 500kgs
Labour and overheads 20%
For questions that include WIP, we need to calculate equivalent units. First, we need to choose the method of valuing
WIP. In an exam, use the first in first out (FIFO) method if the percentage completion of each element of opening WIP is
given. Use the weighted average (WA) method if the value of each element of opening WIP is given. [Note that the two
methods give different valuations for the closing WIP.]
In the weighted average method, no distinction is made between units of opening inventory and new units introduced
to the process during the accounting period.
Step 1 Prepare a statement of equivalent units. Note that opening inventory units count as a full equivalent unit of
production when the weighted average cost system is applied.
Kilograms
Weighted average FIFO
Material Lab and Material Lab and
O/hd O/hd kg kg kg kg
Opening WIP 100 100 Opening WIP 40
(100 x 40%)
Started and 3,000 3,000 Started and 3,000 3,000 completed (3,100 completed (3,100 less op
WIP) less op WIP)
Closing WIP 500 100 Closing WIP 500 100
500 × 100%
500 × 20% Equivalent units 3,600 3,200 Equivalent units 3,500
3,140
Step 2 Prepare a statement of costs per equivalent unit
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Costs
Weighted FIFO average
Material Lab and Material Lab and
O/hd O/hd
$ $ $ $
Op WIP 235 520
Input 8,405 6,200 Input 8,405 6,200
8,640 6,720 8,405 6,200
Cost per Cost per

equivalent 8,640/3,600 6,720/3,200 equivalent 8,405/3,500 6,200/3,140 unit unit
= $2.40 = $2.10 = $2.40 = $1.975
Total cost per kg = $4.50 Total cost per kg = $4.375
Step 3 Prepare a statement of evaluation
Weighted average FIFO Completed kgs Op WIP cost + Lab + O/h to

finish op WIP:
3,100 x $4.50 $13,950 755 + ($1.975 x 100 x $834

40%)
Current production $13,128*

$4.375 x 3,000
Closing WIP Closing WIP

500 x 20% x $2.10 500 x 20% x $1.975
500 x $2.40 $1,410 500 x $2.40 $1,398
$15,360 $15,360
* Slight difference due to rounding $4.375 3,000 = $13,125
Step 4 Prepare the Process 2 accounts
Weighted average
Process 2 account
kg $ kg $
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Contact No. 228-1996/887-2051
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Opening WIP 100 755 Completed output 3,100 13,950

Materials 3,500 8,405 (3,100 x $4.50)
Labour and 6,200 Closing WIP 500 overheads 1,410
3,600 15,360 3,600 15,360
FIFO
Process 2 account
kg $ kg $
Opening WIP 100 755 Completed output 3,100 13,962
Materials 3,500 8,405 (834 + 13,128)
Labour and ______ 6,200 Closing WIP 500 1,398
overheads
3,600 15,360 3,600
15,360
PART II. ASSESSMENT
1. Department of Hope Manufacturing Company presents the following production data for themonth of May,
2013:
Opening inventory 3/8 completed 4,000 units

Started in process 13,000 units
Transferred 9,000 units
Closing inventory, 1/2 completed 4,000 units
3/4 completed 4,000 units
What are the equivalent units of production for the month of May, 2013.
FIFO AVERAGE
a.12,500 units 13,000 units
b.17,000 units 12,500 units
C. 12,500 units 14,000 units
d. 15,000 units 14,000 units
2. Rose Co, bad 3,000 units in work in process at April 1, 2013, which were 60% complete as to conversion cost,
During April, 10,000 units was completed. At April 30, 4,000 units remained in work in process which were 40%
complete as to conversion cost. Direct materials are added at the beginning of the process.
How many units were started during April?
a. 9,000
b. 9,800
c. 10,000
d. 11,000
3. The Ilang-llang Corporation, engaged in a manufacturing business and using process costing, gave the following
production data for three different situations. Stages of completion of the inventories apply to all cost elements.
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(1) Started in process, 6,500 units; transferred, 5,500 units; in process, 400 units 50% completed and 600
units 25% completed.
(2 ) Beginning inventory, 6,250 units 40% completed; started in process, 25,000 units; transferred, 26,250 units; in
process at the end, 3,000 units 50% completed and 2,000 units 25% completed.
(3) Beginning inventory, 6,000 units 30% completed; started in process. I3,000
units; lost in processing, 500 units from production started this period (loss was normal and occurred throughout the
production process); transferred, 14,000 units; in process at the end, 3,000 units 50% completed and 1,500 units 75%
completed.
What are the equivalent production of the three different situations under FIFO and average costing?
FIFO AVERAGE
1 2 3 1 2 3
a.5,850 25,750 14,825 5,850 28,250 16,625
b. 5,850 27,550 18,425 5,580 22,850 15,662
c.8,550 20,575 15,428 5,508 28,025 16,265
d. 5,058 20,775 12,524 5,850 28,250 16,625
4. Orchids Company has a process cost system using the FIFO cost flow method. All materials are introduced at the
beginning of the process in Department One. The following information is available for the month of January 2012:
Units Work in process,

1/1/08 (40% complete as to conversion 500
costs)
Started in January 2,000
Transferred to Department Two during January 2,100 Work in process, 1/31/08
(25% complete as to 400
conversion costs)
What are the equivalent units of production for the month of January 2013?
Materials Conversion
a.2,500 2,200
b.2,500 1,900
c.2,000 2,200
d.2,000 2,000
5. Anahaw Company's production cycle starts in the Mixing Department. The followinginformation is available for
the month of April 2013?
Units
Work inprocess, April 1 (50% complete) 40,000
Started in April 240,000
work-in-process, April 30 (60% complete) 25,000
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Materials are added in the beginning of the process in the Mixing Department. Using the weighted average method,
what are the equivalent units of production for the month of April 2013?
Materials Conversion
a.240,000 250,000
b.255,000 255,000
c.270,000 280,000
d.280,000 270,000
6. Materials are added at the start of the process in Jasmin company's cutting department, thefirst stage of the
production cycle. The following information is available for the month of March 2013.
units
Work in process, March 1 (60% complete as to 60,000
conversion costs)
Started in March 150,000
Transferred to the next department 110,000
Lost in production 30,000
Work in process, March 31 (50% complete as to 70,000
conversion costs
Under Jasmin's cost accounting system, the costs incurred on the lost units are absorbed by the remaining good units.
Using the First in, First out method, what are the equivalent units for the materials unit cost calculation?
a. 120,000
b.145,000
c. 180,000
d. 210,000
7. Bayani Manufacturing Company, using the FIFO process cost system, has the following data for the month of
April:
Percent Complete
Actual Units Materials Conversion cost
Beginning Inventory 15,000 * I 00% 40%
Transferred in 150,000
Transferred out 120,000
Ending Inventory 45,000 100% 30%
What are the equivalent units of production for the month of April?
Materials Conversion Costs
a.150,000 127,500
b.165,000 139,500
C. 135,000 124,500
d. 150,000 133,500
8. Eastern Products Inc., Input all materials at the start of operations in Process 1. The inventory is process at the
beginning of January consisted of 4,000 units with a total cost of materials of P100,000 and labor and overhead of
P20,000 . In January, 20,000 units were started in process with material cost of P500,000. Labor and overhead in January
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Contact No. 228-1996/887-2051
Business Department
cost P280,000. As of end of January., the inventory was 100% complete in materials but only 60% in labor and overhead.
The ending inventory consisted of 10,000 units. The equivalent units of labor and overheard for the month of January
amounted to:
a.20,000
b.10,000 C. 26,000 d.
30,000
9. Yakal Company computed the flow of physical units completed for Department M for the month, of March 2013
as follows:
Units completed:
From work-in process on March 1, 2008 15,000
From March production 45,000
No. 9 – Continued
Materials are added at the beginning of the process. The 12,000 units of work in process at
March 31, 2013, were 80% complete as to conversion costs. The work in process at March 1, 2043 was 80% complete as
to conversion costs. Using the FIFO method, the equivalent units for March conversion costs were:
a. 55,200
b. 57,000
C. 60,600 d. 63,600
10. Mataba Company sells food processors and manufactures them in a single continuousprocess. At the end of August
there were 200 units valued at P30,095, which consists of P25,200 in materials cost and P4,895 in conversion cost.
These were 100% complete as to materials and 25% complete as to conversion cost 1200 units were added to
production during September, and these had materials costs of P168,000. Processors which have not been
completed at the end of September total 200 units and were 100% complete as to materials and 50% complete as to
conversion cost. Conversion cost during September were P158,125. There were no units lost in process.
What are the equivalent units of production for September?
Materials Conversion Cost

a.1,400 1,350
b.1,200 1,100
c.1,200 1,150
d.1,200 1,250
11. The Wiring Department is the second stage of Acacia Company's production cycle. On May 1, the beginning work-in
process contained 25,000 units which were 60% complete as to conversion costs. During May, 100,000 units were
transferred-in from the first stage of Acacia's production cycle. On May 31, the ending work in Process contained
20,000 units which were 80% complete as to conversion costs. Material costs are added at the end of the process,
using the weighted-average method, the equivalent units were:
Materials Conversion costs
a.125,000 100,000
b.105,000 105,000
c.105,000 121,000
d.125,000 121,000
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12. Dhalia Company adds materials at the beginning of the process in Department AInformation concerning the
materials used in April 2013 production is as follows:
Units
Work-in-process at April 10,000
Started during April 50,000
Completed and transferred to next 36,000
department during April
Normal spoilage incurred 3,000
Abnormal spoilage incurred 5,000
Work in process at April 30 16,000
Under Dhalia's cost accounting system, costs of normal spoilage are treated as part of the costs of good units produced.
However, the costs of abnormal spoilage are charged to factory overhead. Using the weighted-average method, what
are the equivalent units for the materials unit cost calculation for the month of April?
a.47,000
b.52,000 C. 55,000 d.
57,000
13. The following information pertains Lanao's First Department for the month of April:
Number of units Cost of Materials

Beginning work-in-process 15,000 P 5,000
Started in April 40,000 18,000
Units completed 42,000
Ending work-in-process 12,000
All materials are added at the beginning of the process. Using the weighted average method, the cost per equivalent
unit for materials is:
a.P0.59
b.P0.55 C. P0.45 d. P0.43
14. Information concerning Dept. B of Simon Co. follovvs:
Units
Beg. work in process 5,000 P6,300 P2,90 P- P 3,400
Units transferred in58,000 17,500 25,500 15,000
P64,300 P20,400 25,500 P18,400
37,000 Units
3,000 completed
End. work
in process
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Conversion costs were 20% complete as to the beginning work in process and 40% complete as to the ending work in
process. All materials are added at the end of the process. Simon Co. uses the weighted average method.
The unit cost for conversion costs and for transferred-in cost rounded to the nearest centavo are:
a. P0.44 and P0.48

b. P0.46 and P0.51
c.P0.48 and P0.51
d. P0.50 and P0.53
15. Reyna Company manufactures product X in a two-stage production cycle in Departments A and B, Materials are
added at the beginning of the process in Department B. Roy uses the weighted-average method. Conversion costs for
department B were 50% complete as to the 6,000 units in the beginning work-in- process and 75% complete as to the
8,000 units in the ending work-in-process,12,000 units were completed and transferred out of Department B
during February 2013. An analysis of the costs relating to work-in-process and production activity in Department B for
February 2013 is as follows:
Transferred Cost
In Materials Conversion
Work-in-process,
February 1:
costs attached P12,000 P2,500 P1,000
February activity:
costs added 29,000 5,500 5,000
The total cost per equivalent unit transferred out for February 2013 of product X, rounded to the nearest centavo, was:
a. P2.75
b. P2.78
c. P2.82
d. P2.85
16. On April 1,2013, the Hari Company had 6,000 units of WIP in Department B, the second and last stage of their
production cycle. The costs attached to these 6,000 units were P12,000 of costs transferred in from Department A,
P2,500 of material cost added in department B and P2,000 of conversion cost added in Department B. Materials are
added in the beginning of the process in Department B. Conversion was 50% complete on April 1,2013. During April,
14,000 units were transferred in from Department A at a cost of P27,000; and a materials costs of P3,500 and
conversion costs of P3,000 were added in Department B. On April 30, 2011, Department B had 5,000 units were added
in Department B. On April 30,2011 Department B had 5,000 units of WIP 60% complete as to conversion costs. The costs
attached to these 5,000 units were P 1 0,500 of costs transferred in from Department A, P1,800 of material costs added
in Department B and P800 of conversion costs added in Department B.
Using the weighted-average method, what are the unit costs?
Transferred Materials Conversion

in cost
a.P1.95 P.25 P.27
b.P1.95 P.30 P.28
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c.P1.80 P.30 P.27

d. P1.70 P.25 P.28
I 7. Department CC has the following April production information:
Beginning work in process 24,000 units

Units started during the month 780,000 units
Units transferred to next operation in April 744,000 units
Ending work in process (40% complete) 60,000 units
Beginning work in process cost P 120,000
April's production cost 5,256,000
No 17 Continued
The unit cost of production is:
a.P 7.00
b. P20.22
c. P 6.89
d. P 6.69
I 8. For the month of March, Payaso Inc. registered the following information:
Beginning work in process (70% complete) 40,000 units

Started in March 300,000 units
Ending work in process (80% complete) 60,000 units
The cost of beginning work in process was FP 140,000 while the production costs for the month registered at P
1 ,172,000. Using the average method, what is the unit cost of production for March?
a.P4.00
b.P3.86 C. P3.91 d. P4.69
I 9. The Masaya Corporation manufactures only one product, and the raw materials must pass through Processes A, B,
and C, in that order, before completion.
On October 1, the inventories of Process C and Finished Goods were:
Process C -- 1,200 units, 2/3 completed, P4,200. Finished Goods -- 1,000

units, at P3.00 per unit.
During October, 2,000 units valued at P5,000 were transferred in from Process B. Direct labor cost in Process C
was P3,100 and the overhead cost applied to Process C was P3,200.
The inventories on October 31 were:
Process C -- 660 units, 1/2 completed. Finished Goods --

1,300 units
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The conversion cost per equivalent unit for October is: No. 19 --- continued
a.P1.50
b.P2.75 C. P3.00 d. P3.50
20. Materials are added at the start of the process in Arce Company's Blending Department, the first stage of the
production cycle. The following information is available for the month of July, 2013.
Work-in-process, July 1 (60% complete as to conversion 60,000 units
costs)
Started in July 150,000 units
Transferred to the next department 110,000 units
Lost in production 30,000 units
'Work-in-process, July 31 (50% complete as to 70,000 units
conversion costs)
Under Arce's cost accounting system, the costs incurred on the lost units are absorbed by the remaining good units.
Using the weighted-average method, what are the equivalent units for the materials unit cost calculation?
a. 120,000
b. 145,000
c. 180,000
d. 210,000
21. Information for the month of May concerning Department A, the first stage of Pinay Corporation's production cycle
is as follows:
Conversion
Materials Costs
Work-in-process, beginning P 4,000 P 3,000
Current costs 20,000 16,000
Total costs P24,000 P19,000
Equivalent units based on
Weighted-average method 100,000 95,000
Average unit costs P 0.24 P 0.20
Goods completed 90,000 units
Work in process, end 10 000 units
No. 21 --- Continued
Material costs are added at the beginning of the process. The ending work-in process is 50% complete as to conversion
costs. How would the total costs accounted for be distributed, using the weighted-averaged method?
Goods Completed Work-in Process,
End
a P39,600 P3,400
b. P39,600 P4,400
C. P43,000 P0
dr. P44,000 P3,400
22. Samahan, Inc. manufactures a highly sensitive smoke alarm and uses the first-in, first-out method for process
costing and finished goods costing. In costing finished goods, the unit cost for units completed from the work in
process at the beginning of the period is kept separate from the unit cost of those started and completed during the
period.
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The total manufacturing costs for the month of June is P264,000 and 2,750 units are completed during the month.
The inventories at the beginning of

June area
Smoke alarms in process (8O% 1,250 units P128,000
complete)
Smoke alarms on hand (complete) 600 units 76,800
The inventories at the end of June are:
Smoke alarms in process (50% 500 units
complete)
Smoke alms on hand (complete) 700 units
How would the total costs accounted for be distributed?

Work-in Process Finished
Goods
a. P33,000 P92,000
b. P33,000 P79,000
c. P32,000 P92,000
d. P66,000 P52
23. China, Inc. manufactures a product which goes through three consecutive Processes,
Process I , Process 2 and Process 3. Data for the month of September, 2013 are as follows:
Process 1 Process 2 Process 3

P8,000 P13,000 P2,000 Opening Work in Process 20,000
4,000 5,000
Materials added 10,000 10,000 16,000
Conversion Costs 6,000 9,000 4,000
What was the value of the output transferred from Process 3 to the finished goods warehouse for the month of
September?
a. P63,000
b. P65,000
c. P67,000
d. P69,000
24. Lucas 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 2013
are as follows:
Units Material Costs

Work in process at October 1, 2013 6,000 P3,000
Units started during October 50,000 50,000
Units completed and transferred to
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Business Department
the next department during October 40,000
Using the weighted-average method, what was the materials cost of work in process at October 31, 2013?
a. P3,060
b. P5,520
C. P6,000 d. P6,120
25. During March 2013 Binata Co.'s Department Y equivalent unit product costs, computed under the weighted-average
method, were as follows:
Materials P1
Conversion 3
Transferred-In 5
Materials are introduced at the end of the process in Department There were 4,000 units (40% complete as to
conversion cost) in work-in-process at March 31, 2013, The total costs assigned to the March 31, 2013, work-in-process
inventory should be
a. P36,000
b. P28,800
c. P2 7,200
d. P24,800
26. The following data pertains to Finishing Department for the month of May, 2013:
I. Opening Inventory 4,000 units
Percentage of completion Value

Material 100% P1,992
Labor 50% 1,074 Overhead 50% 826
Put in process 20,000 units
Materials value - P 12,000
Labor --- P9,984
Overhead is 100% of labor cost.
2, Units completed and transferred to store a 21,000 units
3. In process at the end - 3,000 units
Materials - all
Labor and overhead - 60%
No. 26 Continued
Page 17 of 19
Contact No. 228-1996/887-2051
Business Department
What is the cost of the work-in process at the end for the month of May?
Average Method FIFO
Method
a. P3,577 P3.500
b. P3,477 P3,228
c. P3,528 13,477
d. P3,500 P3,577
27. For the month of May, the Cutting Department of Damit Co had 80% complete as to the beginning work in
process and 50% complete as to the ending work in process. Related data follow:
Units Conversion Costs

Work in process, 1 May 50,000 P88,000
Units started and costs incurred in May 270,000 572,000
Units completed and transferred to
the next department in May 200,000
If the company were using FIFO method, the conversion cost of the work in process in the Cutting Department at the
end of May would amount to
a.P156,000
b.P254,000 C. P132,000
d. P176,000
28. Matalino, Inc. instituted a new process in October 2013. During October, 10,000 units were started in Department A.
Of the units started, 1,000 were lost in the process, 7,000 were transferred to Department B and 2,000 remained work-
in-process at October 31, 2013. The work-in-process at October 31, 2013 was 100% complete as to material costs and
50% complete as to conversion costs. Material costs of P27,000 and conversion costs of P40,000 were charged to
Department A in October. What were the total costs transferred to Department B?
a. P46,900
b.P5.3,600
c. P56,000
d. P57,120
29. The following data for September were taken from the cost records of the Mixing Department of Love
Manufacturing Company, which uses average costing method:
Work in process, August 31:

(all materials, 50% converted) 1,000 units
Put into process during the month of September 10,000 units Work in process,
September 30:
(all materials, 60% converted) 1,400 units
Costs:
Work in process, August 31:
Materials P 24,000
Page 18 of 19
Contact No. 228-1996/887-2051
Business Department
Labor 15,000
Factory overhead 7,000
Put into process during September
Materials 251,000
Labor 193,000
Factory overhead 149,000
The total cost of the units completed and transferred was:
a. P576,000
b. P605,400
c. P640,400
d. P693,800`
30. The Forming Department is the first of a two stage production process. Spoilage is identified when the units have
completed the forming process. Cost of spoiled units are assigned to units completed and transferred to the second
department in the period spoilage is identified. The following information concerns Forming 's conversion costs in May
2013.
Units Conversion Cost

Beginning work-in-process (50% complete) 2,000 P10,000
Units started in May 8,000 75,000
Spoilage-Normal 500
Units completed and transferred 7,000
Ending work in process (80% complete) 2,500
Using the weighted-average method, what was Forming's conversion cost transferred to the second production
department?
a. P59,850
b. P64,125
c. P67,500
d. P71,250
PART III. SOURCES/REFERENCES
“Cost Accounting” by Guillermo M. De Leon Jr and Norma D. De Leon (2008 Edition)

“Cost Accounting”. Institute of Cost Accountants of India. (2016) (1st Edition)
“Cost Accounting” by Vinesh Ottuparammal, et. Al. University of Calicut (2016)
“Practical Accounting 2” by Pedro P. Guerrero (2013 Edition)
Page 19 of 19

Module 13 14 15 ACCTG 31

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KORBEL FOUNDATION COLLEGE, INC.

Purok Spring 1, Brgy. Morales, Koronadal City

SUBJECT CODE: ACCTG 31

Cost per unit = Cost of inputs

Expected output in units

Important terms to understand

Work in progress (WIP)

How to approach process accounting questions

Opening WIP X X Normal loss X X

Overheads X Closing WIP X X

Step 5 Calculate the equivalent units and cost per unit.

Normal loss example

Q = figure taken straight from the information given in the question.

3,800 30,000 3,800 30,000

Cost per kg = Total costs = $30,000 = $7.89 per kg

Abnormal gain example

4,010 11,029 4,010 11,029

(2) Cost per kg = Costs incurred = 11,000 = $2.89

Cost of abnormal gain = $2.89 10 = $29.

3,810 30,029 3,810 30,029

Cost per kg = $30,029 = $7.88/kg

Scrap value example

[Dr Scrap A/C $80, Cr Process A/C $80]

Abnormal gain A/C

3,810 29,947 3,810 29,947

Cost per kg = $29,947 = 7.86/kg

Work in progress example

Opening WIP $235 Materials (Ingredients) 100% 100kgs

$520 Labour and overheads 60%

Input $8,405 Materials

Closing WIP Materials 100% 500kgs

Labour and overheads 20%

Step 2 Prepare a statement of costs per equivalent unit

8,640 6,720 8,405 6,200

Cost per Cost per

Total cost per kg = $4.50 Total cost per kg = $4.375

Step 3 Prepare a statement of evaluation

Weighted average FIFO Completed kgs Op WIP cost + Lab + O/h to

3,100 x $4.50 $13,950 755 + ($1.975 x 100 x $834

Current production $13,128*

Closing WIP Closing WIP

* Slight difference due to rounding $4.375 3,000 = $13,125

Step 4 Prepare the Process 2 accounts

Opening WIP 100 755 Completed output 3,100 13,950

PART II. ASSESSMENT

Opening inventory 3/8 completed 4,000 units

How many units were started during April?

Units Work in process,

What are the equivalent units of production for September?

Materials Conversion Cost

Number of units Cost of Materials

14. Information concerning Dept. B of Simon Co. follovvs:

a. P0.44 and P0.48

Using the weighted-average method, what are the unit costs?

Transferred Materials Conversion

c.P1.80 P.30 P.27

I 7. Department CC has the following April production information:

Beginning work in process 24,000 units

Beginning work in process (70% complete) 40,000 units

On October 1, the inventories of Process C and Finished Goods were:

Process C -- 1,200 units, 2/3 completed, P4,200. Finished Goods -- 1,000

The inventories on October 31 were: