Cost Accounting

Chapter 6
Process Costing
Job order costing Process costing

COLA
Process Costing Systems

Large quantity of
Cola identical units
 Job Order Process Costing
 Assign costs to job  Using an averaging

and then to units technique, assign

within the job costs directly to
units produced
during the period
 Averaging technique to assign
costs to units produced

Unit Cost = Production Costs

Production Quantity
 The Numerator - Production Costs
◦ Accumulate costs by department
◦ Accumulate costs by product
◦ Direct material from material requisitions
◦ Direct labor from time sheets and wage rates
◦ Overhead
 Actual
 Predetermined application rates

Unit Cost = Production Costs

Production Quantity
 Process Costing
• Production Costs
– Direct material from material requisitions
– Direct labor from time sheets and wage rates
– Overhead
• Actual
• Predetermined application rates
 Materials Requisition Form
Date ___________________ No. ###
Job No. _________________ Department _______________
Authorized by ___________ Issued by _________________
Received by _____________ Inspected by _______________
Item Part Unit of Quantity Quantity Unit Total
No. No. Descrip. Measure Required Issued Cost Cost
 Employee Time Sheet
Employee Name _______________
Employee No. _______________ For week ending
Department _______________ _______

Start Stop Total

Type of Work Job No. Time Time Day Hours

Employee Signature Supervisor’s Signature

 The Denominator - Units Produced
 Complicated by work in process

◦ Units started last period and completed this

period
◦ Units started this period and not completed
 Convert partially completed units to
equivalent whole units

Unit Cost = Production Costs

Production Quantity
 Approximation of the number of whole
units of output that could have been
produced from the actual effort expended
 Includes units
◦ started last period and finished this period
◦ started and finished this period
◦ started this period and not finished
 Assumes FIFO physical flow through the
production department
 Weighted Average Method
◦ combines
 beginning work in process
 current period production
 FIFO Method

◦ separates
 beginning work in process
 current period production
Weighted Average
Beginning WIP 100%
Started and finished 100%
Ending WIP % completed
FIFO THE
Beginning WIP DIFFERENCE % completed
Started and finished 100%
Ending WIP % completed
 Direct material
◦ added at the beginning, during, and/or at the
end of process
 Direct labor
◦ added throughout the process
 Overhead
◦ added throughout the process
 based on direct labor
 based on other, multiple cost drivers
1 Units to account for
2 Units accounted for Units
3 Determine equivalent units
4 Costs to account for
5 Compute cost per equivalent unit
Costs
6 Assign costs to inventories
 Cost of Production Report
Name of Department
for the period --- 3

Production Data: 1 2
Units to account for
Units accounted for EUP for each cost
Cost Data:
Costs to account for 4
Cost per EUP 5
6
Cost Assignment:
Transferred Out
Ending Work In Process Inventory
Beginning WIP
5,000
Started 200,700
Units to account for
205,700
 Step 2 - Units Accounted For
Beginning WIP 5,000
Started 200,700
Units to account for 205,700
must
Finished and transferred 203,000 be
Ending WIP 2,700 equal
Units accounted for 205,700
 Step 3 - Compute Equivalent Units
DM Conversion
Beginning WIP inventory 5,000 5,000
Started and completed 198,000 198,000
Ending WIP inventory 2,700
2,160* Equivalent units 205,700
205,160
* ending units * % complete
2,700 * 80% = 2,160
Weighted Average Method
 Step 4 - Costs to Account For
DM Conversion Total
Beginning WIP $ 5,943 $ 16,758 $ 22,701
Current costs 321,120 660,270 981,390
To account for $327,063 $677,028 $1,004,091

Weighted Average Method

 Step 5 - Cost per Equivalent Unit
DM Conversion Total
Beginning WIP $ 5,943 $ 16,758 $ 22,701
Current costs 321,120 660,270 981,390
To account for $327,063 $677,028 $1,004,091

Divide by EUP 205,700 205,160

Cost per EUP $1.59 + $3.30 = $4.89
Weighted Average Method
 Step 6 - Assign Costs to Inventories
Transferred (203,000 * $4.89) $992,670
Ending WIP Inventory Transferred
Direct Materials Out Ending
(2,700 * $1.59) $ 4,293 WIP
Conversion Costs
(2,700 * 80% * $3.30) 7,128 11,421
Cost accounted for $1,004,091*
*must agree with costs to account for
Weighted Average Method
 Emphasizes current period costs and production

 Steps 1 and 2 are the same

 Process Costing - FIFO
• Step 3
DM Conversion
Beginning WIP/completed 0 3,000*
Started and completed 198,000 198,000
Ending WIP Inventory 2,700 2,160
Equivalent units 200,700 203,160

* beginning units * % complete in current period

5,000 * 60% = 3,000
 Process Costing - FIFO
• Step 4 is the same
• Step 5
DM Conversion Total
Current costs $321,120 $660,270 $981,390

Divide by EUP 200,700 203,160

Cost per EUP $1.60 + $3.25 = $4.85

 Step 6 Assign Costs to
Transferred
Inventories - FIFO
Beginning WIP Inventory $22,701
Cost to complete
Conversion (3,000 * $3.25) 9,750 $ 32,451
Started and completed
(198,000 * $4.85) 960,300
Total cost transferred Transferred $992,751
Ending inventory Out Ending
Direct Materials
(2,700 * $1.60) $4,320 WIP
Conversion Costs
(2,7000 * 80% * $3.25) 7,020 11,340
Cost accounted for $1,004,091*
*must agree with costs to account for
Weighted Average FIFO
 EUP DM 205,700  EUP DM 200,700
 EUP Conversion 205,160  EUP Conversion 203,160
 Cost per unit DM $ 1.59  Cost per unit DM $ 1.60
 Cost per unit Conv.  Cost per unit Conv. 3.25
3.30  Total $ 4.85
 Total $4.89  Transferred Out $
 Transferred Out 992,751
$992,670  Ending WIP 11,340
 Ending WIP 11,421  Total
 Total $1,004,091
$1,004,091
 The purpose of the six steps
◦ Assign a value to ending work in process
◦ Assign a value to items transferred out
◦ Prepare this journal entry
Finished Goods
Work in Process
or
Transferred In Cost (successor department)
Work in Process (current department)
Landers Company

Landers Company has the following information available for May:

Beginning Work in Process Inventory

  (25% complete as to conversion) 10,000 units
Started 120,000 units
Ending Work in Process Inventory
  (30% complete as to conversion) 30,000 units
Beginning Work in Process Inventory Costs:
  Material $  2,100
  Conversion 2,030
Current Period Costs:
  Material $ 33,000
  Conversion 109,695

All material is added at the start of production and all products completed are
transferred out.
 REQUIRED:
1. Refer to Landers Company. Prepare an equivalent units
schedule using

(a)FIFO method
(b) Weighted average method.

2. Refer to Landers Company. Prepare a schedule showing the

computation for cost per equivalent unit assuming the

(a) FIFO method

(b) Weighted average method.

3. Refer to Landers Company. Prepare a schedule showing the

assignment of costs assuming the

(a)FIFO method
(b)Weighted average method.
 Landers Company
Schedule of Equivalent Units for
FIFO and Weighted Average
May 31, 20X5
FIFO Weighted Average

Beginning Work In Process 10,000 Beginning Work In 10,000

Process
Units Started 120,000 Units Started 120,000
Units to Acct. For 130,000 Units to Acct. For 130,000

Beginning Work In Process 10,000 Transferred Out 100,000

Started & Completed 90,000 Ending Work in 30,000

Process
Ending Work in Process 30,000 Units Accounted For 130,000

Units Accounted For 130,000

(a) FIFO (b) Weighted Average
Mat. CC Mat. CC
BWIP 0 7,500
S&C 90,000 90,000 TO 100,000 100,000
EWIP 30,000 9,000 EI 30,000 9,000
EUP 120,000 106,500 EUP 130,000 109,000
 Landers Company
Schedule of Average Cost Per Unit
FIFO and Weighted Average
May 31, 20X5

(a) FIFO (b) Weighted Average

Mat. CC Mat. CC
Costs $33,000 $109,695 $ 35,100 $111,725
Eq Units 120,000  106,500  130,000  109,000
$.275/eq unit $ 1.03/eq unit $.27/eq unit $  1.025/eq
unit

Total cost/eq. unit $  1.305/eq $  1.295/eq

unit unit
 Landers Company
Schedule of Assigned Costs
FIFO
May 31, 20X5

Beginning Work in Process $  4,130

To complete beginning inventory(7,500 x $1.03)    7,725
$ 11,855
Started and Completed
90,000 x $1.305 =  117,450
Total costs transferred out $129,305
Ending Work in Process
30,000 x $ .275 = $  8,250
9,000 x $1.03 =   9,270
Cost of ending inventory $ 17,520
Total costs accounted for $146,825
 Landers Company
Schedule of Assigned Costs
Weighted Average
May 31, 20X5

Completed
100,000 x $1.295 = $129,500
Ending Work in Process
30,000 x $ .27 = $  8,100
9,000 x $1.025 =    9,225
$ 17,325
Total costs accounted for $146,825
Maxwell Company

Maxwell Company adds material at the start of production. The following production
information is available for June:

Beginning Work in Process Inventory

  (45% complete as to conversion) 10,000 units
Started this period 120,000 units
Ending Work in Process Inventory
  (80% complete as to conversion) 8,200 units
Beginning Work in Process Inventory Costs:
  Material $24,500
  Conversion 68,905
Current Period Costs:
  Material $ 75,600
  Conversion 130,053
1. How many units must be accounted for?
2.What is the total cost to account for?
3.How many units were started and completed in the period?
4.What are the equivalent units for material using the weighted average
method?
5.What are the equivalent units for material using the FIFO method?
6.What are the equivalent units for conversion using the weighted average
method?
7.What are the equivalent units for conversion using the FIFO method?
8.What is the material cost per equivalent unit using the weighted average
method?
9.What is the conversion cost per equivalent unit using the weighted
average method?
10.What is the cost of units completed using the weighted average?
11.What is the conversion cost per equivalent unit using the FIFO
method?
12.What is the cost of all units transferred out using the FIFO method?
ANSWERS:

1.130,000
2. $299,058
3. 111,800
4. 130,000
5. 120,000
6. 128,360
7. 123,860
8. $.77
9. $1.55
10. $282,576
11. $1.05
12. $287,004
 Taylor Company uses a weighted average process costing
system and started 30,000 units this month. Taylor had 12,000 units
that were 20 percent complete as to conversion costs in beginning
Work in Process Inventory and 3,000 units that were 40 percent
complete as to conversion costs in ending Work in Process
Inventory.

What are equivalent units for conversion costs?

a. 37,800
b. 40,200
c. 40,800
d. 42,000
 Kerry Company makes small metal containers. The company
began December with 250 containers in process that were 30
percent complete as to material and 40 percent complete as to
conversion costs. During the month, 5,000 containers were
started. At month end, 1,700 containers were still in process
(45 percent complete as to material and 80 percent complete
as to conversion costs).

Using the weighted average method, what are the equivalent

units for conversion costs?
a. 3,450
b. 4,560
c. 4,610
d. 4,910
Mehta Company Co. uses a FIFO process costing system. The
company had 5,000 units that were 60 percent complete as to
conversion costs at the beginning of the month. The company
started 22,000 units this period and had 7,000 units in ending
Work in Process Inventory that were 35 percent complete as to
conversion costs. What are equivalent units for material, if
material is added at the beginning of the process?
a.
18,000
b.
22,000
c.
25,000
d.
27,000
Julia Company makes fabric-covered hatboxes. The company began
September with 500 boxes in process that were 100 percent complete as to
cardboard, 80 percent complete as to cloth, and 60 percent complete as to
conversion costs. During the month, 3,300 boxes were started. On September
30, 350 boxes were in process (100 percent complete as to cardboard, 70
percent complete as to cloth, and 55 percent complete as to conversion costs).

Using the FIFO method, what are equivalent units for cloth?

a. 3,295
b. 3,395
c. 3,450
d. 3,595
 Simplify costing process
 Eliminate periodic cost recomputations
 Same as FIFO computations

◦ emphasize current period costs and production

 Inventories are stated at standard cost
 Variances are calculated for material,

labor, and overhead

 Multidepartment Processing

Process 1 Wait
Materials

Transferred-In
Transferred-in Process 2
Costs
Cost

Finished
Product Process 3
Wait
Process Costing with Standard Costs
• Assigns a “normal” production cost to the
equivalent units of output each period
• Allows managers to quickly recognize and
investigate significant deviations from
expected production costs
• Allows benchmarking with other firms
 Characteristics of job order and process
costing systems
 Various product lines
◦ different direct material - job order costing
◦ different direct labor – job order costing
◦ same process - process costing
 Hybrid costing used for furniture, clothing,
jam
 Appendix 1 –
Alternative Cost Computation
• There are two alternative methods to
calculate Weighted Average and FIFO
equivalent units of production (EUP)
• Use alternative methods
– To confirm standard computation
– As a simplified computation
 Conversion Costs WA FIFO
Beginning WIP inventory 5,000 3,000
Started and completed 198,000 198,000
Ending WIP inventory 2,160 2,160
Equivalent units 205,160 203,160
 Units transferred out (whole units)
Plus Ending work in process (equivalent units)
Weighted average equivalent units (EUP)
Less Beginning work in process (equivalent
units)
FIFO equivalent units (EUP)
 Appendix 1 –
Alternative Cost Computation 1
Conversion Costs
Candles transferred 203,000
Ending WIP EUP 2,160
Weighted Average EUP 205,160
Beginning WIP EUP (2,000)
FIFO EUP 203,160
 Appendix 1 –
Alternative Cost Computation 2
Total units to account for
Less EUP to be completed next
period
Weighted Average EUP
Less EUP completed in prior period
FIFO EUP
 Appendix 1 –
Alternative Cost Computation 2
Conversion Costs
Total units to account for 205,700
EUP to be completed next period (540)
Weighted Average EUP 205,160
EUP completed in prior period (2,000)
FIFO EUP 203,160
 Continuous loss
◦ Loss occurs fairly uniformly through the process

 Discrete loss
◦ Loss occurs at a specific point and is detectable only
when a quality check is performed
 Use Method of Neglect
◦ Excludes spoiled units in the equivalent units schedule
◦ Spreads cost of lost units proportionately over the good
units transferred and those remaining in WIP inventory

NOTE: Cost of Normal spoilage = 0

SPOILAGE ( NORMAL AND DISCRETE )

• Normal shrinkage and discrete losses

– Assign costs only to units that have passed the
inspection point

INSPECTION POINT> PERCENTAGE OF COMPLETION

ASSIGNED TO TRANSFERRED OUT UNITS

INSPECTION POINT < PERCENTAGE OF COMPLETION

ASSIGNED TO TRANSFERRED OUT UNITS AND
ENDING INVENTORY
 SPOILAGE ( ABNORMAL)
• Abnormal losses
– Period expense
– ALWAYS accounted for on an equivalent unit
basis
 SPOILAGE
Normal Abnormal
Spoilage Spoilage
Loss in all ending
Continuous inventory and
Loss transferred out Period expense
units on an EUP in EUP
basis
Loss in all units
Discrete passed inspection
point in ending Period expense
Loss
inventory and in EUP
transferred out on
an EUP basis
 Talmidge Company
The following information is available for Talmidge Company for the current year:

Beginning Work in Process Costs of Beginning Work in Process:

(75% complete) 14,500 units Material $25,100

Started 75,000 units Conversion 50,000

Ending Work in Process Current Costs:

(60% complete) 16,000 units Material $120,000

Abnormal spoilage 2,500 units Conversion 300,000

Normal spoilage 5,000 units

(continuous)

Transferred out 66,000 units

All materials are added at the start of production.

 COMPUTE THE FOLLOWING USING WEIGHTED AVERAGE

1. EUP –MATERIALS
2. EUP- CONVERSION COST
3. COST PER EUP-MATERIALS
4. COST PER EUP-CONVERSION COST
5. COST ASSIGNED TO NORMAL SPOILAGE
6. ASSUMING THAT COST PER EUP-MATERIALS=1.75 AND
COST PER EUP- CC= 4.55, WHAT IS THE COST
ASSIGNED TO ENDING WORK IN PROCESS?
 COMPUTE THE FOLLOWING USING WEIGHTED AVERAGE

1. EUP –MATERIALS= 84,500

2. EUP- CONVERSION COST= 78,100
3. COST PER EUP-MATERIALS= 1.72
4. COST PER EUP-CONVERSION COST= 4.48
5. COST ASSIGNED TO NORMAL SPOILAGE- 0, NO COSTS
ARE ASSIGNED TO NORMAL , CONTINUOUS SPOILAGE.
HIGHER COSTS ARE ASSIGNED TO GOOD UNITS
PRODUCED
6. ASSUMING THAT COST PER EUP-MATERIALS=1.75 AND
COST PER EUP- CC= 4.55, WHAT IS THE COST
ASSIGNED TO ENDING WORK IN PROCESS?= 71,680
Bowman Company
Bowman Company has the following information for July:

Units started 100,000 units

Beginning Work in Process: (35% 20,000 units
complete)
Normal spoilage (discrete) 3,500 units
Abnormal spoilage 5,000 units
Ending Work in Process: (70% complete) 14,500 units
Transferred out 97,000 units
Beginning Work in Process Costs:
  Material $15,000
  Conversion 10,000

All materials are added at the start of the production process. Bowman Company
inspects goods at 75 percent completion as to conversion.
 COMPUTE THE FOLLOWING USING THE FIFO METHOD:

1. EUP –MATERIALS
2. EUP- CONVERSION COST
3. COST PER EUP-MATERIALS
4. COST PER EUP-CONVERSION COST
5. ASSUMING THAT COST PER EUP-MATERIALS=1.00 AND
COST PER EUP- CC= 1.50, WHAT IS THE AMOUNT OF
THE PERIOD COST FOR JULY?
6. ASSUMING THAT COST PER EUP-MATERIALS=1.00 AND
COST PER EUP- CC= 1.50, WHAT IS THE TOTAL COST
ASSIGNED TO TRANSFERRED OUT UNITS?
 COMPUTE THE FOLLOWING USING THE FIFO METHOD:

1. EUP –MATERIALS= 100,000

2. EUP- CONVERSION COST= 106,625
3. ASSUMING THAT COST PER EUP-MATERIALS=1.00 AND
COST PER EUP- CC= 1.50, WHAT IS THE AMOUNT OF
THE PERIOD COST FOR JULY?= 10,625
4. ASSUMING THAT COST PER EUP-MATERIALS=1.00 AND
COST PER EUP- CC= 1.50, WHAT IS THE TOTAL COST
ASSIGNED TO TRANSFERRED OUT UNITS?= 244,438
Jones Company
The following information is available for Jones Company for April:

Started this month 80,000 units

Beginning WIP
  (40% complete) 7,500 units
Normal spoilage (discrete) 1,100 units
Abnormal spoilage 900 units
Ending WIP
  (70% complete) 13,000 units
Transferred out 72,500 units
Beginning Work in Process Costs:
  Material $10,400
  Conversion 13,800
Current Costs:
  Material $120,000
  Conversion 350,000

All materials are added at the start of production and the inspection point is at the end
of the process.
 COMPUTE THE FOLLOWING USING THE WEIGHTED AVERAGE METHOD:

1. EUP –MATERIALS
2. EUP- CONVERSION COST
3. COST PER EUP-MATERIALS
4. COST PER EUP-CONVERSION COST
5. WHAT IS THE COST ASSIGNED TO NORMAL SPOILAGE
AND HOW IS IT CLASSIFIED?
6. WHAT IS THE TOTAL COST ASSIGNED TO GOODS
TRANSFERRED OUT?
 COMPUTE THE FOLLOWING USING THE WEIGHTED AVERAGE METHOD:

1. EUP –MATERIALS = 87,500

2. EUP- CONVERSION COST= 83,600
3. COST PER EUP-MATERIALS= 1.49
4. COST PER EUP-CONVERSION COST= 4.35
5. WHAT IS THE COST ASSIGNED TO NORMAL SPOILAGE
AND HOW IS IT CLASSIFIED?= 6,424 ASSIGNED TO
TRANSFERRED OUT UNITS
6. WHAT IS THE TOTAL COST ASSIGNED TO GOODS
TRANSFERRED OUT?= 429,824
South Company produces paint in a process in which spoilage occurs
continually. Spoilage of 1 percent or fewer of the gallons of raw
material placed into production is considered normal. The following
operating statistics are available for June 2006:

Beginning inventory ( 60% complete as to material;

70% complete as to conversion) 8,000 gallons
Started during June 180,000 gallons
Ending inventory( 40% complete as to material
20% complete as to conversion ) 4,000 gallons
Spoiled 1,400 gallons
1. How many gallons were transferred
out?
2. What are the FIFO equivalent units of
production for Material? For
Conversion?
Weezer Plastics uses the Weighted Average process costing system,
and company management has specified that the normal loss from
shrinkage cannot exceed 5% of the units started in a period. All
raw material is added at the start of the production process. March
processing information follows:

Beginning inventory ( 30% complete as to conversion ) 10,000 units

Started during March 60,000 units
Completed during March 58,200 units
Ending inventory( 20% complete as to conversion) 8,000 units
A. How many units are there to account for?
B. How many units should be treated as normal loss?
C. How many units should be treated as abnormal loss?
D. What are the equivalent units of production for direct
material? For conversion?
E. How are costs associated with the normal spoilage
handled?
F. How are costs associated with the abnormal spoilage
handled?
Rodin Inc. produces small plastic toys. As the raw material is heated,
shrinkage occurs. Management believes that shrinkage of less than 8% is
normal. All direct material is entered at the beginning of the process.
March 2006 data as follow:

Beginning inventory ( 30% complete as to conversion) 18,000 lbs.

Started during the month 60,000 lbs.
Transferred 63,000 lbs.
Ending inventory 10,800 lbs.
Loss ? lbs.

The following costs are associated with March production:

Beginning inventory:
Material 7,000
Conversion 5,400 12,400
Current period:
Material 19,530
Conversion 17,928 37,458
Total costs 49,858
Prepare a March 2006 cost of production
report for Rodin Inc. using FIFO process
costing
The Sweet Temptations Company has two processing departments, Cooking and
Packaging. Ingredients are placed into production at the beginning of the process in
Cooking, where they are formed into various shapes. When finished, they are
transferred into Packaging, where the candy is placed into heart and tuxedo boxes
and covered with foil. All material added in Packaging is considered as one material
for convenience. Since the boxes contain a variety of candies, they are considered
partially complete until filled with the appropriate assortment. The following
information relates to the two departments for February 20X7:

Cooking Department:
Beginning WIP (30% complete as to conversion) 4,500 units
Units started this period 15,000 units
Ending WIP (60% complete as to conversion) 2,400 units
Packaging Department:
Beginning WIP (90% complete as to material, 1,000 units
80% complete as to conversion)
Units started during period ?
Ending WIP (80% complete as to material and 500 units
80% complete as to conversion)
a. Determine equivalent units of production for both
departments using the weighted average method.

b . Determine equivalent units of production for both

departments using the FIFO method.
 Cooking Department
Materials Conversion
Costs
Transferred Out 17,100 17,100
Ending Work in Process 2,400 1,440
TOTAL EUP 19,500 18,540

Packaging Department  
Transferred Materials Conversion
In Costs
Transferred Out 17,600 17,600 17,600
Ending Work in Process   500   400   400
TOTAL EUP 18,100 18,000 18,000
 Cooking Department
Materials Conversion
Costs
Beginning Work in Process 0 3,150
Transferred 12,600 12,600
Ending Work in Process 2,400 1,440
TOTAL EUP 15,000 17,190

Packaging Department

Transferred Materials Conversion

In Costs
Beginning Work in Process 0 100 200
Transferred from Cooking 16,600 16,600 16,600
Ending Work in Process   500   400   400
TOTAL EUP 17,100 17,100 17,200
 The following costs were accumulated by Department 2 of Hughes Company
during April:

Production for April in Department 2 (in units):

WIP-April 1 2,000 60% complete

Complete period transferred 20,000
WIP-April 30 5,000 40% complete

Cost
Transferred Material Conversion Total
from Costs
DEPARTMENT 1
Beginning $ 17,050 $ 5,450 $ 22,500
Inventory
Current Period 184,000 $ 34,000 104,000  322,000
Cost
$ 201,050 $ 34,000 $ 109,450 $344,500
Materials are not added in Department 2 until the very end of processing
Department 2.
Required: Compute the cost of units completed and the value of ending WIP for:

a. Weighted average inventory assumption

b FIFO inventory assumption

.
a. Weighted average inventory assumption

COGM = $344,500 - $50,160 = $294,340

End WIP 5,000x $8.042 = $40,210

CC = 2,000 units x $4.975 =   9,950
$50,160

b. FIFO inventory assumption

COGM = $344,500 - $50,000 = $294,500

End WIP 5,000 units x $8.00 = $40,000

CC = 2,000 units x $5.00 = 10,000
$50,000
The Sour Temptations Company has two processing departments, Fabrication and
Assembly. Metal is placed into production in the Fabrication Department, where it is
cut and formed into various components. These components are transferred to
Assembly, where they are welded, polished and coated with imported material.
Production data follow for these two departments for March 2006:

Fabrication Department:
Beginning WIP (100% complete as to material ; 5,000 units
25% complete as to conversion)
Units started this period 40,000 units
Ending WIP (100% complete as to material ;60% 6,800 units
complete as to conversion)
Assembly Department:
Beginning WIP (0% complete as to material, 35% 2,000 units
complete as to conversion)
Units started during period ?
Ending WIP (0% complete as to material and 15% 6,100 units
complete as to conversion)
Compute the EUP for each department using

a. FIFO
b. WEIGHTED AVERAGE