ACB 20503: TUTORIAL PROCESS COSTING WEIGHTED AVERAGE METHOD

QUESTION 1

MELUR Sdn. Bhd. manufactures electric pumps. Material is introduced at the beginning of
the process in the SIAGE Department. Conversion costs are applied uniformly throughout
the process. As the process is completed, goods are immediately transferred to the
TAMAGE Department.

Data for the SIAGE Department for the month of July 2020 as follows:

Work in process, 30 June 2020 : RM175,500 (consisting

of RM138,000 materials and RM37,500 conversion costs;
10,000 units
100% completed for direct materials, but only 25%
completed for conversion costs

Units started during July 2020 80,000 units

Units completed during July 2020 70,000 units
Work in process, 31 July 2020 : 100% completed for
direct material, but only 50% completed for conversion 20,000 units
costs
Direct materials added during July 2020 RM852,000
Conversion costs added during July 2020 RM634,500

Required:

Prepare a production cost-report for the SIAGE Department. Assume weighted-average

product costing. The report should show:

a) Equivalent units of production by cost factor.

b) Cost per equivalent unit for each cost factor.

c) Cost of electric pump transferred to the TAMAGE Department.

d) Cost of the work-in-process inventory on 31 July 2020, in the SIAGE Department

QUESTION 2

CLINICAL Manufacturing Bhd is a company producing variety soft-drinks which is primarily

used high-quality fruits and herbs. Currently, the most prevalent and demanded soft-drink
among teenagers is Grapes Twist. Two Departments are involved in the production of
Grapes Twist. In the Crashing, Fermenting, Aging (CFA) Department, the high quality grapes
were entered into the production. After processing, the input will be transferred to the
Bottling Department.

In the CFA Department, the raw materials are added at the beginning process while
labour and overhead are applied uniformly throughout the process. The overhead cost is
allocated to each of the department based on direct labour hours. The following information
relate to the production of Grapes Twist during June 2022 in the CFA Department;

1. The estimated manufacturing overhead cost for the year of 2022 is RM6,425,000
and the estimated direct labour hours for the current year 2,570,000 hours. During
June, the labour works for 107,000 hours in producing the product.

2. Work in process inventory as at 31 May 2022:

Units Costs
16,000 litres (80 percent Direct Material RM91,200
complete as to conversion) Direct labour RM24,200
Departmental overhead RM70,000

3. The data for raw material inventory as follows:

Date (June 2022) Items Quantity (litres) RM

1 Beginning Inventory 8,000 40,000
15 Purchases 40,000 204,000
20 Purchase 40,000 206,000

The raw material inventory entered into the production during the June is 64,000
litres.

4. Direct labour cost incurred during production is RM428,000.

5. Work in process inventory as at 30 June 2022 is 20,000 litres as 60 percent

completed.
6. The company uses weighted average process costing to accumulate product cost,
however for raw material inventory; the firm uses the FIFO inventory method.

Required:

a) Prepare analysis of physical flow of units.

b) Calculate equivalent units of production.
c) Calculate cost per equivalent units of production.
d) Calculate cost of finished goods inventory and transferred out to Bottling Department
and provide its journal entry.
e) Calculate cost of work in process inventory as at 30 June 2012.

TUTORIAL PROCESS COSTING FIFO METHOD METHOD

QUESTION 3

Frozen Bakery is a manufacturer company producing traditional cookies. One of the popular
and high request cookies is Snowy Cheese. In order to produce Snowy Cheese, there is a
series of process including Mixing, Baking and Packaging. In the Mixing Department, direct
materials are added at the beginning of the process and conversion costs are incurred
uniformly throughout the process. The Mixing Department is using FIFO method of process
costing and the following information available for the month of August 2021:

Units: Units
Work in process on 1 August 2021 (60% completed) 25,000
Units started into production during August 80,000
Units completed and transferred out to Baking
???
Department
Work in process, 31 August 2021 (20% completed) 15,000

Costs: RM
Beginning work in process
Direct materials costs 35,000
Conversion costs 43,000
Cost of beginning work in process 78,000

Cost incurred during production in August

Direct materials 136,500
Conversion costs 235,200
Cost incurred in August 371,700
Required:

a) How many units were completed and transferred out to Baking Department?
Reconcile the number of physical units worked during the period.

b) Calculate the number of equivalent unit.

c) Calculate cost per equivalent unit rounded to two decimal places.

d) What is the amount (RM) transferred to Baking Department? Prepare the journal
entry for transfer of product from Mixing Department to Baking Department

e) Calculate the cost of the ending work in process in Mixing Department?