PRACTICAL ACCOUNTING 2

PROCESS COSTING

1. Department II of Charity Manufacturing Company presents the following production data for the
month of May, 2011:

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, 2011?
FIFO Method : 12,500 unit; Average Method: 14,000 units

2. Walden Company has a process cost system. All materials are introduced at the beginning of the
process in Department One. The following information is available for the month of January
2011:

Work-in-process, 1/1/2011
(40% complete as to conversion costs)………………………….. 500 units
Started in January ……………………………………………………………………….. 3,000 units
Transferred to Department Two during January…………………………. 2,000 units
Work-in-process, 1/31/2011
(25% complete as to conversion costs)………………………….. 400 units

What are the equivalent units of production for the month of May, 2011?
FIFO Method: Materials = 2,000; Conversion = 2,000
Average Method: Materials = 2,500; Conversion = 2,200

3. Department A is the first stage of Mann Company’s production cycle. The following information
is available for conversion costs for the month of April 2011:

Units
Work-in-process, beginning (60% complete)………………………….. 20,000 units
Started in April ……………………………………………………………………….. 340,000 units
Completed in April and transferred to department B……………… 320,000 units
Work-in-process, ending (40% complete)…………………………….. 40,000 units

The equivalent units for conversion cost calculation are:

FIFO Method: 324,000; Average Method: 336,000

4. Bart Co. adds materials at the end of the process in Department M. The following information
pertain to Department m’s work-in process during April:
Units
Work-in-process, April 1
(60% complete as to conversion costs)……………………… 3,000 units
Started in April ………………………………………………………………………… 25,000 units
Completed ………………………………………………………………………………. 20,000 units
Work-in-process, April 30
(75% complete as to conversion costs)………………………….. 8,000 units

What are the equivalent units of production for the month of April?
FIFO Method: Materials = 20,000; Conversion = 24,200
Average Method: Materials = 20,000; Conversion = 26,000
5. Sussex Corporation’s production cycle starts in the Mixing department. The following
information is available for April:
Units
WIP, April 1 (50% complete)…………………………………………..…….. 40,000 units
Started in April ……………………………………………………………………….. 240,000 units
WIP, April 30 (60% complete)………………………………….…………….. 25,000 units

Materials are added at 50% stage of completion in the Mixing Department. What are the
equivalent units of production for the month of April?
FIFO Method: Materials = 280,000; Conversion = 250,000
Average Method: Materials = 280,000; Conversion = 270,000

6. On September 30, work-in-process totaled 9,000 units 60% complete (based on conversion costs
added uniformly throughout the department and material added at the start of the process). A
total of 100,000 units were transferred to the next department during October. On October 31,
a total of 8,000 units 40% complete (based on conversion costs) were still in process in
Department A.

Using the weighted-average cost flow method, which of the following equivalent units should be
used in the calculation of costs for October? Transfer Costs = 108,000; Materials = 108,000;
Conversion = 103,200

7. BWIP was 60% complete as to conversion costs, and EWIP was 45% complete as to conversion
costs. The peso amount of the conversion cost included in EWIP (using the weighted average
method) is determined by multiplying the average unit conversion costs by what percentage of
total units in EWIP? 45%

8. The following data refer to the units processed by the grinding department for a recent month.

Beginning work-in-process ………………………..………………………….. 12,000

Units started ………………………………………………………………………….. 200,000
Units completed ………………………………………………………………..…… 192,000
Ending work-in-process ……………………………………..………………….. 20,000

The beginning work-in-process was 60% complete, and the ending work-in-process is 70%
complete. What are the equivalent units of production for the month?
FIFO Method: 198,800; Average Method: 206,000

9. With the following data for a company using the FIFO process cost system, calculate the
equivalent units for materials and conversion costs:
Percent Complete
Whole Conversion
Units Materials Costs
Beginning inventory…………………….. 10 100% 30%
Transferred in ………………………………. 100
Transferred out ……………………………. 80
Ending inventory ………………………….. 30 100% 40%

Materials = 100; Conversion Costs = 89

10. A company produces plastic drinking cups and uses a process cost system. Cups go through
three departments – mixing, molding, and packaging. During the month of June, the following
information is known about the mixing department.

Work-in-process, at June 1 …………………………….… 10,000 units

An average of 3/4 complete
Units completed …………………………………………………. 140,000 units
 Work-in-process, at June 30 ………………………….… 10,000 units
An average of 1/4 complete

Materials are added two points in the process: Material A is added at the beginning of the
process and Material B at the midpoint of the mixing process. Conversion costs are incurred uniformly
throughout the mixing process. Under a FIFO costing flow, the equivalent units for Material A, Material
B, and conversion costs respectively for the month of June (assuming no spoilage) would be: 150,000;
130,000; 137,500

11. Glo Co., a manufacturer of combs, budgeted sales of 125,000 units for the month of April. The
following additional information is provided:
Number of units
Actual inventory at April 1
Work-in-process ……………………………………………..……………………… None
Finished goods ………………………………………………………………………… 37,500
Budgeted inventory at April 30
Work-in-process (75% processed) …………………………………………… 8,000
Finished goods ………………………………………………………………………… 30,500

How many equivalent units of production did Glo budget for April? 123,500

12. Bronson Company, which had 6,000 units in work-in-process at January 1 that were 60%
complete as to conversion costs. During January, 20,000 units were completed. At January 31,
8,000 units remained in WIP which were 40% complete as to conversion costs. Materials are
added at the beginning of the process.

Using the weighted-average method, the equivalent units for January for conversion costs
were? 23,200

13. Using the same information at No. 12, how many units were started during January? 22,000

14. Kew Co. had 3,000 units in work-in-process at April 1 which were 60% complete as to conversion
cost. During April, 10,000 units were 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? 11,000

15. The Wiring Department is the second stage of Flem Company’s production cycle. On May 1, the
BWIP contained 25,000 units which were 60% compete as to conversion costs. During May,
100,000 units were transferred –in from the first stage of Flem’s production cycle. On May 31,
EWIP contained 20,000 units which were 80% complete as to conversion costs. Materials added
at the end of the process. Using the weighted – average method, the EUP on May 31 were :
Transferred-in Costs = 125,000; Materials = 105,000; Conversion Costs = 121,000

16. If 100 units are 70% complete, 30 units 60% complete, 200 units 40% complete, and 60 units 5%
complete, how many EUP have been produced? 171

17. Department Z of the Libra Mfg. Corporation had the following data for the month of October,
2011:

Beginning work in process, 70% complete …………………………………………….. 40,000 units

Started in process during the month ………………………………………………………. 300,000 units
Ending work in process, 80% complete ………………………………………………….. 60,000 units

The cost of the beginning work in process was P140,000, and the production costs for the month
amounted to P1,172,000. How many equivalent production units were completed in October,
2011 using FIFO Method? 300,000