PROCESS

COSTING
Sample Problems
IECOSAC – EB2
Febr uar y 5, 2014
REVIEW:
 What is Process Costing?
 What is the difference between Process Costing and Job
Order Costing?
 What does COPR stand for?
 What are the two essential parts of COPR?
 What is the difference between FIFO Method and
Weighted Average Method?
 What is the difference between even application and
uneven application of cost elements?
 What does EP stand for?
 Total number of
EQUIVALENT units processed
How many units absorbed
during that
materials and conversion
PRODUCTION (EP)
EPM
process/in that
department
elements?

EPC Actual Materials &

Conversion elements spread
WIPBeg. out during a process/in a
particular department

WIPBeg. # of units from the beginning

inventory that will still be
Started to Process
processed in the department

# of units from the previous

process/department that will
WIPEnding
Started to Process be processed in the
department

# of units from the ending

inventory that have been
completed in the department
WIPEnding
Denominator for material and
Total EPM & EPC conversion unit costs
computation
EQUIVALENT
PRODUCTION (EP)
EPM

EPC
Started to Process(Quantity Schedule) ≠ Started to Process(Finished & Transferred)

WIPBeg.

WIPBeg.
Started to Process
Total # of units
transferred to the next
process/department
WIPEnding
Started to Process
What’s left from the
original Started to
Process (from the
WIPEnding Quantity Schedule)

Total EPM & EPC Not yet transferred to

the next department
Started to Process
≠ (Quantity Schedule) ≠ Started to Process(Finished & Transferred)
Still to be
Finished Finished
Still to be
processed
Still to be
Finished Finished
processed
Still to be
processed
Still to be
Finished EP = % not Finished
processed
Still to be EP = 100%
Finished
processed
Still to be Finished
processed
Still to be
processed yet complete Finished
processed
(transferred to the
next
department/process
)
*Started to
Process(Finished & Transferred)

Still to be
Finished processed
Still to be
Finished Finished
WIPEnding processed
Still to be
Finished WIPEnding
processed
from the for the current
previous month
month (what’s left in the
(% complete) Started to Process department that were
WIPBeg.
(original – from Quantity Schedule) not yet transferred)

Will absorb costs

incurred in this
department during the
current period
ILLUSTRATIVE
PROBLEM # 1:

5/8 will be
Quantity processed
Schedule
3/5 still in WIP
(not finished)
ILLUSTRATIVE PROBLEM # 1:
(a) FIFO – Even

c
c
c
c

c
c
c
 Material

ILLUSTRATIVE
50% 30% 20%

PROBLEM # 1: 0%
Process
50% 75% 100%

5/8 will be
processed

3/5 still in WIP

(not finished)
ILLUSTRATIVE PROBLEM # 1:
(b) FIFO – Uneven

Material
50% 30% 20%

c
0% 50% 75% 100% c
Process
3/8 2/5
c c c c

c
c
c
ILLUSTRATIVE
PROBLEM # 2:

5/10 still in WIP

(not finished)
ILLUSTRATIVE PROBLEM # 2:
(a) WAM– Even
 Material

ILLUSTRATIVE
50% 30% 20%

PROBLEM # 2: 0
days
Process
3 days 6 days 10

5/10 still in WIP

(not finished)
ILLUSTRATIVE PROBLEM # 2:
(b) WAM – Uneven

Material
50% 30% 20%

0 3 days 6 days 10
days
Process 5 days
ASSIGNMENT: (DUE MONDAY)
Answer:
p. 28, #1
p. 30, #5 & #6

*Yellow pad (handwritten)

PROBLEM SET # 7: