Malidem, Rogz Chariz C.

Module 3 Assignment
Part A.

QUESTION 1: Why is the process costing system involved with less clerical work than the job
order costing system?

Businesses that manufacture identical or homogeneous products use the process costing
system, which uses WIP accounts just for each production department or process. Businesses
that manufacture bespoke items, on the other hand, use the job order costing system, which
uses a work-specific work product (WIP) account. An additional distinction is that, in the case of
task order costing, expenses are attributed to specific jobs, whereas in the process costing
system, production costs are merely summed monthly by department. For the most part, this
means that whereas job order costing is dependent on the number of orders a firm receives,
process costing is based on how many departments or processes a company has.

QUESTION 2: Assume 400 units were sold for $50. What is the mark-up rate?
Unit cost: $34.375
Selling Price: $50

Mark-up Rate = [(SP-UC)/UC]x100

= [(50-34.375)/34.375] *100
= [(15.625)/34.375] *100
=0.4545 *100
=45.45%

QUESTION 3: What is the amount of gross profit earned for July?

Sales: 400 units * 50 = 20,000

COGS: 400 units * 34.375 = 13,750

Gross Profi t= Sales-COGS

= 20,000 - 13,750
= 6,250

QUESTION 4: What about July? Why did I not start with July?
Because July is the First Month or Beginning month. Therefore, it did not have any previous
month that the company can reference.
QUESTION 5: Which of the two methods, WAM or FIFO, gives a better costing and more relevant
cost for decision making?
The First In-First Out approach will provide more relevant costs for decision-making and a more
suitable costing of the inventories. Here, the current cost and previous cost are also divided.
There are two types of finished units: those originating from the commencement of the work in
progress and those starting or being received. Furthermore, this closely resembles the real flow
of products. Before units that have just been started or received, the work that has already
begun will be deemed completed. It is also regarded as the inventory valuation method with the
highest theoretical accuracy.

QUESTION 6: Compute for the cost of goods sold if 500 units are sold.
COGS: 21.7764* 500 = 10,888.2

QUESTION 7: Based on the above PCR, the in process beg will be assigned two costs: previous
cost and current costs but the received units will be assigned only current costs from
transferred in costs and this department costs. Does this mean that the in process beg
has no transferred in cost?
No, the statement does not mean that the in-process beginning has no transferred-in cost. The
beginning work-in-process can include transferred-in costs from previous departments, in
addition to other costs from prior periods.
 Part B.
PROBLEM 1)
Physical Units Equivalent Units

Materials Conversion Cost

Work In Process, July 1 15,000
Started 250,000
265,000

245,00
Completed & transferred 245,000 100% 245,000 100% 0
In Process, July 31 20,000 100% 20,000 40% 8,000
253,00
265,000 265,000 0

Previous cost Materials Conversiom Costs Total

Current Costs 210,000 60,000 270,000
1,458,00
Total Cost 3500000 0 4,958,000
1,518,00
Divided by Units 3710000 0 5,228,000
Total 265,000 253,000 518,000
14 6 20

Cost to be accounted for

4,900,00
Completed & transferred 245000*20= 0
Materials 20,000*14= 280,000
Conversion 8,000*6= 48,000
5,228,00
Total 0
FIFO:

Quantity Schedule Physical Units Equivalent Units

Completed In Process, July 1 15,000 1/3 5,000

Started and 230,00 100
finished 0 100% 230,000 % 230,000
In Process, July 31 20,000 100% 20,000 40% 8,000
265,00
0 250,000 243,000

Conversiom
Materials Costs Total
Cost 3500000 1458000 4958000
Divided by Units 250000 243,000 493,000
Total 14 6 20

Materials 20,000*14= 280,000

8,000*6
Conversion = 48,000
Total 328,000

Completed 245,000*20= 4900000.0

Total 5,228,000
PROBLEM 2)
WAM:
PRODUCTION COST REPORT
NO FAT-DEPT 1
For the month ended, February 28, 20xx
Quantity Schedule Physical Equivalent Units
WD Material A WD Materials B WD Labor & OH

Started 600
Units Received 3,900
4,500

Transferred to Finishing 4,100 100% 4,100 100% 4,100 100% 4,100

In Process, June 400 100% 400 - 30% 120
4,500 4,500 4,100 4,220

Total Cost to be accounted for: Materials A Materials B Conversion From preceeding Department Total
Previous costs $ 4,000.00 $ - $ 1,340.00 $ 9,090.00 $ 14,430.00
Current Costs 21,200.00 16,400.00 17,650.00 67,410.00 122,660.00
Total costs 25,200.00 16,400.00 18,990.00 76,500.00 $ 137,090.00
Divide by equivalent units 4,500.00 4,100.00 4,220.00 4,500.00
Equivalent unit costs $ 5.60 $ 4.00 $ 4.50 $ 17.00 $ 31.10

Cost Accounted For:

Transferred to Finishing 4,100 $ 31.10 $ 127,510.00
Transferred from Cutting 400 $ 17.00 $ 6,800.00
In Process, June
Materials A 400 $ 5.60 $ 2,240.00
Materials B -
Conversion 120 4.50 540.00 $ 2,780.00
Total costs accounted for $ 137,090.00
FIFO:
PRODUCTION COST REPORT-FIFO
ROSA LEE MANUFACTURING COMPANY
For the month ended, April 30, 20xx
Quantity Schedule Physical Units Equivalent Units
Material A Materials B Labor & OH
In Process, June 600
Started 3,900
Total actual units 4,500

Transferred to Refining & Packaging (72,000):

In Process, June 1 600 50% 300
Started and finished 3,500 100% 3,500 100% 3,500 100% 3,500
In Process, June 30 400 100% 400 100% 400 30% 120
4,500 3,900 3,900 3,920

Cost Analysis: Total Unit Cost

Previous Costs (no unit cost) 76,500.00
Materials A 25,200.00 /3900 6.46154
Materials B 16,400.00 /3900 4.20513
Conversion Cost 18,990.00 /3920 4.84438

Total costs to be accounted for 137,090.00 ₱ 15.51

Cost Accounted For:

Transferred to Refining & Packaging: Multiply
In Process Beginning- Previous cost 76,500
Started 3,500 $ 15.51 54288.7
Conversion 300 4.84438 1453.31
In Process End- Material A 400 6.46154 2584.62
Material B 400 4.21 1682.05
Labor and Overhead 120 4.84 581.33
Total costs accounted for $ 137,090.0
PROBLEM 3)
You are given the following information for Rosehips Company for the month of February.
Dept 1 Dept 2
Started/Received 50,000 60,000
In Process Beg 20,000 10,000
80% done 60% done
Completed and Transferred 60,000 45,000
In Process End 60% done 40% incomplete

Previous costs:
Materials P160,000 P 35,000
Conversion – (30% overhead) 150,000 64,000
Transferred In 180,000

Current Costs:
Transferred In Cost ???? from PCR Dept 1 this month
Material cost P365,000 338,750
Conversion cost (50% overhead) 444,000 386,000

Materials are added at the start of the processing in Dept 1 while in Dept 2 only
50% materials are added at the midpoint of processing and the rest at the end of
the processing. Required:
a. Prepare a production cost report under WAM for Dept 1.
Quantity Schedule Physical Equivalent Units
Materials Labor & OH
In Process, February 1 20,000
Started 50,000
70,000
Transferred to Dept. 2 60,000 100% 60,000 100% 60,000
In Process, February 28 10,000 100% 10,000 60% 6,000
70,000 70,000 66,000

Total Cost to be accounted for: Materials Conversion Total

Previous costs $ 160,000.00 $ 150,000.00 $ 310,000.00
Current Costs 365,000.00 444,000.00 809,000.00
Total costs 525,000.00 594,000.00 $ 1,119,000.00
Divide by equivalent units 70,000.00 66,000.00
Equivalent unit costs $ 7.50 $ 9.00 $ 16.50

Cost Accounted For:

Transferred to Dept. 2 60,000 $ 16.50 $ 990,000.00
In Process, February 28:
Materials 10,000 $ 7.50 $ 75,000.00
Conversion 6,000 9.00 54,000.00 $ 129,000.00
Total costs accounted for $ 1,119,000.00
 b. Prepare a production cost report under WAM for Dept 2
Quantity Schedule Physical Equivalent Units
Materials Labor & OH
In Process, February 1 10,000
Received from Dept. 1 60,000
70,000
Transferred Out 45,000 100% 45,000 100% 45,000
In Process, February 28 25,000 50% 12,500 60% 15,000
70,000 57,500 60,000

Cost Analysis: Transferred In Materials Conversion Total

Previous Cost $ 180,000.00 $ 35,000.00 $ 64,000.00
Current Costs 990,000.00 338,750.00 386,000.00
Total 1,170,000.00 373,750.00 450,000.00 $ 1,993,750.00
Divide by equivalent units 70,000.00 57,500.00 60,000
Equiv unit costs (Average UC) $ 16.7143 $ 6.50 $ 7.50 $ 30.7143

Cost Accounted For:

Transferred Out 45,000 $ 30.7143 $ 1,382,142.86
In Process, February 28:
Transferred In 25,000 $ 16.7143 $ 417,857.14
Materials 12,500 6.50 81,250.00
Conversion 15,000 7.50 112,500.00 611,607.14
Total costs accounted for $ 1,993,750.00

c. Entries for both departments.

WIP – Dept. 1 809,000

Materials 365,000
Direct Labor 296,000
Applied Overhead 148,000

WIP – Dept. 2 990,000

WIP – Dept. 1 990,000

WIP - Dept. 2 724,750

Materials 338,750
Direct Labor 257,333.33
Applied Overhead 128,666.67
 Finished Goods 1,382,142.86
WIP – Dept. 2 1,382,142.86

PROBLEM 4) Using Problem 3 but that the company uses the first in first out
method.
Required:
a. Prepare a PCR FOR DEPT 1 FIFO method
Quantity Schedule Physical Units Equivalent Units
Materials Labor & OH
In Process, February 1 20,000
Started 50,000
Total actual units 70,000

Transferred to Dept 2 (60,000):

In Process, February 1 20,000 0% - 20% 4,000
Started and finished 40,000 100% 40,000 100% 40,000
In Process, February 28 10,000 100% 10,000 60% 6,000
70,000 50,000 50,000

Cost Analysis: Total Unit Cost

Previous Costs 310,000.00
Current Costs - Materials 365,000.00 /50,000 7.30000
Conversion 444,000.00 /50,000 8.88000
Total costs to be accounted for 1,119,000.00 16.18000

Cost Accounted For:

Transferred to Dept 2:
In Process Beginning- Previous cost $ 310,000.00
Current cost 4,000 $ 8.88 35,520.00
Started 40,000 16.18 647,200.00 $ 992,720.00
In Process End:
Current Material cost 10,000 $ 7.30 $ 73,000.00
 b. Prepare a PCR FOR DEPT 2 FIFO method

Quantity Schedule Physical Units Equivalent Units

Transferred In Materials Labor & OH
In Process, February 1 10,000
Received from Dept 1 60,000
Total actual units 70,000

Transferred Out (45,000 units):

In Process Beginning 10,000 50% 5,000 40% 4,000
Received 35,000 100% 35,000 100% 35,000 100% 35,000
In Proc, February 28 25,000 100% 25,000 50% 12,500 60% 15,000
70,000 60,000 52,500 54,000

Cost Analysis: Total Unit Cost

Previous Costs $ 279,000.00
Transferred In Costs 992,720.00 /60,000 $ 16.54533
Current Costs - Materials 338,750.00 /52,500 6.45238
Conversion 386,000.00 /54,000 7.14815
Total costs to be accounted for $ 1,996,470.00 $ 30.14586

Cost Accounted For:

Transferred Out (45,000 units):
In Process February 1- Previous $ 279,000.00
Materials 5,000 $ 6.45 32,261.90
Lab & OH 4,000 7.15 28,592.59
Received 35,000 30.15 1,055,105.19 $ 1,394,959.68
In Process February 28 - Materials 12,500 $ 6.45 $ 80,654.76
Conversion Costs 15,000 7.15 107,222.22
Transferred In Costs 25,000 16.55 413,633.33 $ 601,510.32
Total costs accounted for $ 1,996,470.00
 PROBLEM 5) Refer to Operation Costing last part of QUIZ 2 Assignments to be submitted, scanned using
word the night before the scheduled presentation.

Quantity Schedule Equivalent Units

Materials Labor & OH
Red Brown Red Brown
Finished 600 400 600 400
In Process 200 100 120 30
Total 800 500 720 430

Cost Analysis Total Costs Equivalent Unit Cost

Red Pots
Materials $ 2,800.00 /800 $ 3.50
Labor $ 8,050.00 *(720/1,150)/720) $ 7.00

Total $ 10,850.00 $ 10.50

Brown Pots
Materials $ 1,500.00 /500 $ 3.00
Labor $ 8,050.00 *(430/1,150)/430) $ 7.00
Total $ 9,550.00 $ 10.00

Cost Accounted for Red Brown

Finished 600*10.5= 6,300 400*10= 4,000
In Process, End 200*10.5= 2,100 100*10= 1,000

THAT IN ALL THINGS GOD MAY BE GLORIFIED