PROCESS COSTING STUDY NOTES

PREPARED BY:
MARIA CRISTINA P. OBESO, CPA, MBA

STEPS IN PROCESS COSTING

1. DETERMINE THE UNITS TO ACCOUNT FOR

Beg. WIP xx
Received xx
Started xx
xx

2. ACCOUNT FOR THE UNITS

Completed xx
Ending WIP xx

3. COMPUTE FOR THE EQUIVALENT PRODUCTION

FIFO AVERAGE
Considers the % of completion of the Beg. Does not consider the % of completion of
WIP that were completed Beg. WIP that were completed

4. DETERMINE THE TOTAL COSTS TO ACCOUNT FOR

Added xx
Beg. WIP xx
Transferred in xx
xx

5. COMPUTE THE UNIT COSTS

FIFO AVERAGE
Unit Cost = Current Period Cost Unit Cost = Current Period Cost + Beg. WIP
EUP cost
EUP

6. ASSIGN COSTS TO INVENTORIES

Completed xx
Ending Work In Process xx
xx

COMPUTATION OF EQUIVALENT UNITS OF PRODUCTION (EUP)

FIFO AVERAGE

Beginning XX Completed XX
Started and completed XX Ending XX
Ending XX XX
XX
COMPUTATION OF UNIT COST

FIFO AVERAGE
Cost added during the period Cost in beginning inventory +Cost added during the period
EUP EUP

EQUATION TO BE USED FOR PROCESS COSTING

WIP, beg. + units started/received = units completed + WIP, ending

WIP, beg. + units started/received = units completed + units completed + unit lost + WIP, ending
and transferred and on hand