Prepared by: Brian Christian S.

Villaluz, CPA

ADVANCED FINANCIAL ACCOUNTING & REPORTING

Process Costing

Part I: Computation of Equivalent Units of Production (EUP) without spoilage

Problem 1:
Double Click Manufacturing Co. uses process costing in the manufacture of its sole product. The following
production data are presented to you:

Beginning inventory (40% converted) 10,000 units

Started in process 75,000 units
Ending inventory (60% converted) 20,000 units

All materials are added at the start of processing.

1. Using average costing, compute for the EUP for materials and conversion.
2. Using FIFO, compute for the EUP for materials and conversion.

Problem 2:
Double Click Manufacturing Co. uses process costing in the manufacture of its sole product. The following
production data are presented to you:

Beginning inventory (40% to complete) 10,000 units

Started in process 75,000 units
Ending inventory (60% to complete) 20,000 units

All materials are added at the end of processing.

1. Using average costing, compute for the EUP for materials and conversion.
2. Using FIFO, compute for the EUP for materials and conversion.

Problem 3:
Double Click Manufacturing Co. uses process costing in the manufacture of its sole product. The following
production data are presented to you:

Transferred out 120,000 units

Started in process 150,000 units
Ending inventory (7/8 converted) 45,000 units

Forty percent of materials is added when the processing is halfway completed; balance when 80%
completed. Beginning inventory, if any, need 3/5 to be completed.

1. Using average costing, compute for the EUP for materials and conversion.
2. Using FIFO, compute for the EUP for materials and conversion.

Problem 4:
Double Click Manufacturing Co. uses process costing in the manufacture of its sole product. The following
production data are presented to you:

Beginning inventory ( to complete) 8,000 units

Transferred out 40,000 units
Units started 60,000 units
Ending inventory (6/7 completed) ???

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20% of materials is added when the units are 25% completed; remaining materials are added when the
units are 90% converted.

1. Using average costing, compute for the EUP for materials and conversion.
2. Using FIFO, compute for the EUP for materials and conversion.

Problem 5:
Monique Textile Inc., produces sophisticated fabrics that are being supplied to 5-star hotels and to high-
end condominiums that require components to be integrated in various points of the production. At the
beginning of the month, 4,000 units were in process. These were 20% converted.

For the current month, Monique started to produce 16,000 units. Only 12,000 of these were completed.
The remainder was behind 25% from completion.

Due to the complexity of this textile, materials are added at various points in the production. To sum up:

Direct materials:
40% are put into production at the beginning
50% are placed when the fabrics are 55% completed
10% are placed when the fabrics are 99% done

1. Using average costing, compute for the EUP for materials and conversion.
2. Using FIFO, compute for the EUP for materials and conversion.

Part II: Computation of Equivalent Units of Production (EUP) with spoilage

Problem 6:
Cherry Manufacturing Co. uses process costing in the manufacture of its sole product. The following
production data are presented to you:

Units started 100,000 units

WIP, beg. (35% complete) 20,000 units
Normal spoilage 3,500 units
Abnormal spoilage 5,000 units
WIP, end (30% incomplete) 14,500 units

All materials are added at the start of the process. Cherry inspects goods at 75% completion as to
conversion.

1. Using average costing, compute for the EUP for materials and conversion.
2. Using FIFO, compute for the EUP for materials and conversion.

Problem 7:
The following information is available for BGC Company for the current period:

Beginning WIP (75% complete) 14,500 units

Started in process 75,000 units
Ending WIP (60% complete) 16,000 units
Normal spoilage 5,000 units
Abnormal spoilage 2,500 units

All materials are added at the start of production.

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1. Using average costing, compute for the EUP for materials and conversion.
2. Using FIFO, compute for the EUP for materials and conversion.

Part III: Cost of production report (with spoilage)

Problem 8:
Cherry Manufacturing Co. uses process costing in the manufacture of its sole product. The following
information is available for the current year:

Units started 100,000 units

WIP, beg. (35% complete) 20,000 units
Normal spoilage 3,500 units
Abnormal spoilage 5,000 units
WIP, end (30% incomplete) 14,500 units

Cost of beginning WIP

Material P90,000
Conversion 210,000

Current cost
Material 690,000
Conversion 471,150

All materials are added at the start of the process. Cherry inspects goods at 75% completion as to
conversion.

Using FIFO
1. Compute for the EUP for materials and conversion.
2. Compute for the cost per EUP for materials and conversion.
3. Compute for the cost assigned to units completed.
4. Compute for the cost assigned to the ending inventory.
5. Compute for the cost of abnormal lost units.

Using average costing

6. Compute for the EUP for materials and conversion.
7. Compute for the cost per EUP for materials and conversion.
8. Compute for the cost assigned to units completed.
9. Compute for the cost assigned to the ending inventory.
10. Compute for the cost of abnormal lost units.

Problem 9:
Cherry Manufacturing Co. uses process costing in the manufacture of its sole product. The following
information is available for the current year:

Units started 100,000 units

WIP, beg. (35% complete) 20,000 units
Normal spoilage 3,500 units
Abnormal spoilage 5,000 units
WIP, end (20% incomplete) 14,500 units

Cost of beginning WIP

Material P90,000
Conversion 210,000

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Current cost
Material 690,000
Conversion 471,150

All materials are added at the start of the process. Cherry inspects goods at 75% completion as to
conversion.

Using FIFO
1. Compute for the EUP for materials and conversion.
2. Compute for the cost per EUP for materials and conversion.
3. Compute for the cost assigned to units completed.
4. Compute for the cost assigned to the ending inventory.

Using average costing

5. Compute for the EUP for materials and conversion.
6. Compute for the cost per EUP for materials and conversion.
7. Compute for the cost assigned to units completed.
8. Compute for the cost assigned to the ending inventory.

Problem 10:
Cherry Manufacturing Co. uses process costing in the manufacture of its sole product. The following
information is available for the current year:

Units started 100,000 units

WIP, beg. (80% complete) 20,000 units
Normal spoilage 3,500 units
Abnormal spoilage 5,000 units
WIP, end (20% incomplete) 14,500 units

Cost of beginning WIP

Material P90,000
Conversion 210,000

Current cost
Material 690,000
Conversion 471,150

All materials are added at the start of the process. Cherry inspects goods at 75% completion as to
conversion.

Using FIFO
1. Compute for the EUP for materials and conversion.
2. Compute for the cost per EUP for materials and conversion.
3. Compute for the cost assigned to units completed.
4. Compute for the cost assigned to the ending inventory.

Using average costing

5. Compute for the EUP for materials and conversion.
6. Compute for the cost per EUP for materials and conversion.
7. Compute for the cost assigned to units completed.
8. Compute for the cost assigned to the ending inventory.

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Part IV: Comprehensive problem (without spoilage)

A company employs FIFO process costing system concerning its only product which undergoes production
in assembly department and finishing department. The following data for the year ended December 31,
2016 are provided:

ASSEMBLY DEPARTMENT
Units: Cost:
January 1, 2016 100,000 units 40% complete as to conversion Direct materials P3,000,000
Direct labor P5,000,000
Factory overhead P2,000,000
December 31, 2016 150,000 units 80% complete as to conversion ???
Units started during 2016 400,000 units Direct materials P12,000,000
Direct labor P15,000,000
Factory overhead P13,000,000

FINISHING DEPARTMENT
Units: Cost:
January 1, 2016 50,000 units 70% incomplete as to conversion Transferred In P10,000,000
Direct materials P6,000,000
Direct labor P1,000,000
Factory overhead P3,000,000
December 31, 2016 30,000 units 10% incomplete as to conversion ???
Units started during 2016 ??? Transferred In ???
Direct materials P30,000,000
Direct labor P40,000,000
Factory overhead P10,000,000

Additional information:
(a) It is the companys policy to add conversion cost evenly throughout the period in the two
departments.
(b) It is the companys policy to add all direct materials in the assembly department at the start of the
process while all direct materials in the finishing department are added at the end of the process.
(c) There is no spoilage in both departments.

In the assembly department

1. What is the EUP for materials and conversion?
2. How much is the cost per EUP for materials and conversion?
3. What is the cost of goods manufactured or cost assigned to units completed for the
year ended December 31, 2016?
4. What is the cost assigned to December 31, 2016 work-in-process inventory?

In the finishing department

5. What is the EUP for transferred in, materials, and conversion?
6. How much is the cost per EUP for transferred in, materials, and conversion?
7. What is the cost of goods manufactured or cost assigned to units completed for the
year ended December 31, 2016?
8. What is the cost assigned to December 31, 2016 work-in-process inventory?

Part V: Comprehensive problem (with spoilage)

Exciting Company applies process costing in the manufacture of its sole product. Manufacturing starts in
Department 1 where materials are all added at the start of processing. The good units are then transferred
to Department 2 where all the incremental materials needed for its completion are added after final

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inspection. In both departments, units are inspected at the end of processing. Department 1 uses FIFO
while Department 2 uses average costing. The following production data for August show:

Department 1 Department 2
QUANTITY SCHEDULE
Beg. WIP 6,000 4,000
Stage of completion 1/3 4/5
Ending WIP 9,000 7,000
Stage of completion 2/3 5/7
Put into process 44,000 -
Normal loss 1,200 1,000
Abnormal loss 800 500

COST DATA
Beg. WIP
Transferred in - P3,710
Materials P9,000 -
Conversion costs 6,500 4,000
Current period costs
Materials 88,000 62,100
Conversion costs 67,500 49,300
Transferred in - ???

DEPARTMENT 1
1. What is the EUP for materials and conversion?
2. How much is the cost per EUP for materials and conversion?
3. What is the cost of goods manufactured or cost assigned to units completed for the
year ended December 31, 2016?
4. What is the cost assigned to December 31, 2016 work-in-process inventory?

DEPARTMENT 2
5. What is the EUP for transferred in, materials, and conversion?
6. How much is the cost per EUP for materials and conversion?
7. What is the cost of goods manufactured or cost assigned to units completed for the
year ended December 31, 2016?
8. What is the cost assigned to December 31, 2016 work-in-process inventory?

END

-BCSV-

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ANSWERS:
PROBLEM 1: PROBLEM 7:
1. DM 85,000; CC 77,000 1. DM 84,500; CC 78,100
2. DM 75,000; CC 73,000 2. DM 70,000; CC 67,225

PROBLEM 2: PROBLEM 8:
1. DM 65,000; CC 73,000 1. DM 100,000; CC 106,525
2. DM 65,000; CC 67,000 2. 6.90; 4.42
3. 1,264,853
4. 144,913
5. 51,075
6. DM 120,000; CC 113,525
7. 6.50; 6.00
8. 1,251,000
9. 155,150
10. 55,000

PROBLEM 3: PROBLEM 9:
1. DM 165,000; CC 159,375 1. DM 100,000; CC 107,975
2. DM 165,000; CC 153,375 2. 6.90; 4.36
3. 1,254,161
4. 155,760
5. DM 120,000; CC 114,975
6. 6.50; 5.92
7. 1,238,412
8. 167,540

PROBLEM 4: PROBLEM 10:

1. DM 45,600; CC 64,000 1. DM 100,000; CC 98,975
2. DM 44,000; CC 62,000 2. 6.90; 4.76
3. 1,248,042
4. 160,729
5. DM 120,000; CC 114,975
6. 6.50; 5.92
7. 1,238,412
8. 167,540

PROBLEM 5: Part IV
1. DM 19,600; CC 19,000 1. DM - 400,000; CC - 430,000
2. DM 18,000; CC 18,200 2. 30; 65.12
3. 37,687,200
4. 12,314,400
5. TI 350,000; DM 370,000; CC 382,000
6. 107.68; 81.08; 130.89
7. 130,923,150
8. 6,764,430

PROBLEM 6: Part V
1. DM 120,000; CC 113,525 1. DM 44,000; CC 45,000
2. DM 100,000; CC 106,525 2. 2.00; 1.50
3. 141,200
4. 27,000
5. 43,000; 34,500; 41,000
6. 3.37; 1.80; 1.30
7. 227,885
8. 30,090