Republic of the Philippines

BATANGAS STATE UNIVERSITY

MODULE IN COST ACCOUNTING

E5-1

Equivalent
Units

a. Completed during month 10,000

Equivalent units of work in process, end of period:
(5,000 units, one-half completed) 2,500 12,500

b. Completed during month 22,000

Equivalent units of work in process, end of period:
(4,000 units, three-fourths completed) 3,000 25,000

c. Completed during month 8,000

Equivalent units of work in process, end of period:
1,000 units, one-fourth completed................................................................. 250
500 units, two-fifths completed ...................................................................... 200 450 8,450

d. Completed during month 25,000

Equivalent units of work in process, end of period:
5,000 units, one-half completed................................................................. 2,500
5,000 units, three-fourths completed ...................................................... 3,750 6,250 31,250

e. Completed during month 48,000

Equivalent units of work in process, end of period:
1,500 units, four-fifths completed ...............................................................1,200
4,000 units, one-fourth completed .............................................................1,000 2,200 50,200

E5-2

a. Beginning units in process 600

Units started in production 8,000 8,600
Less units transferred to finished goods 8,600
Ending units in process 0
Units finished during month 8,600
Ending equivalent units in process 0
Equivalent units 8,600

b. Beginning units in process 900

Units started in production 6,500 7,400
Less ending units in process 400
Units transferred to finished goods 7,000
Units transferred to finished goods 7,000
Ending equivalent units in process
(400 units, one-half completed) 200
Equivalent units 7,200
 Republic of the Philippines
BATANGAS STATE UNIVERSITY

MODULE IN COST ACCOUNTING

c. Units transferred to finished goods 12,900

Ending units in process 1,200 14,100
Less beginning units in process 1,500
Units started in production 12,600
Units transferred to finished goods 12,900
Ending equivalent units in process
(1,200 units, one-fourth completed) 300
Equivalent units 13,200

d. Units transferred to finished goods 7,200

Ending units in process 150 7,350
Less units started in production 7,250
Beginning units in process 100
Units transferred to finished goods 7,200
Ending equivalent units in process
(150 units, one-half completed) 75
Equivalent units 7,275

e. Units transferred to finished goods 8,200

Ending units in process 200 8,400
Units started in production 8,400
Beginning units in process 0
Units transferred to finished goods 8,200
Ending equivalent units in process
(200 units, one-half completed) 100
Equivalent units 8,300
f. Beginning units in process 400
Units started in production 6,200 6,600
Units transferred to finished goods 6,200
Ending units in process 400
Equivalent units 6,300
Units transferred to finished goods 6,200
Equivalent ending units in process ¼ completed* 100
*Equivalent ending units in process = 100
Ending units in process 400

E5-3

Cost Element Production Cost Unit Output Unit Cost

Materials P 45,000 20,000 P 2.250
Labor 36,000 20,000 1.800
Factory overhead 22,500 20,000 1.125
Total P103,500 P 5.175
 Republic of the Philippines
BATANGAS STATE UNIVERSITY

MODULE IN COST ACCOUNTING

E5-4

Cost Element Production Cost Unit Output Unit Cost

Materials P 18,900 10,000* P 1.890
Labor 44,100 10,000 4.410
Factory overhead 26,250 10,000 2.625
Total P 89,250 P 8.925

*Units completed and transferred ............................................................................................................ 8,000

3,000 units in process, two-thirds completed ................................................................................. 2,000
Unit output for the month ....................................................................................................................... 10,000

E5-5

Production Cost
Beginning Work Cost for Unit
Cost Element In Process Month Total Output Unit Cost
Materials P 1,250 99,150 100,400 40,000* 2.51
Labor 675 54,925 55,600 40,000 1.39
Factory overhead 950 75,050 76,000 40,000 1.90
Total P 2,875 P 229,125 P 232,000 P 5.80

*Units completed and transferred ................................................................................................................. 38,500

3,000 units in process, one-half completed ............................................................................................... 1,500
Unit output for the month ............................................................................................................................... 40,000

E5-6

Production Cost
Beginning Work Cost for Unit
Cost Element In Process Month Total Output Unit Cost
Materials P 2,500 130,000 132,500 47,500* 2.789
Labor 1,400 70,000 71,400 47,500 1.503
Factory overhead 1,800 82,000 83,800 47,500 1.764
Total P 5,700 P 282,000 P 287,700 P 6.056
 Republic of the Philippines
BATANGAS STATE UNIVERSITY

MODULE IN COST ACCOUNTING

*Units completed and transferred ........................................................................................................................ 45,000

5,000 units in process, one-half completed ......................................................................................................... 2,500
Unit output for the month ........................................................................................................................................ 47,500

E5-7
Units in process at beginning of month ................................................................................................................... 500
Units started in process and finished .................................................................................................................... 2,000
Units completed during month ......................,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,.......................... 2,500
2,500 × $1.20 = P 3,000 credited to Work in Process at end of month
Current costs = 2,655 debited to Work in Process during month
P 345 balance in Work in Process at beginning of month

(There are no units in process at the end of the month, so there would be no balance remaining in
Work in Process at the end of the month.)
500 units, three-fifths completed at the beginning of the month equals the equivalent of 300 fully
completed units.
$345 ÷ 300 = $1.15 unit cost for the prior month.

E5-8

Cost Element Production Cost Unit Output Unit Cost

Materials P 8,800 10,000 P 0.88
Labor 7,200 10,000 0.72
Factory overhead 8,800 10,000 0.88
Total 24,800 P 2.48 (a)
Transferred from 10,000
Assembly 30,000 3.00
Total P 54,800 P 5.48 (b)
 Republic of the Philippines
BATANGAS STATE UNIVERSITY

MODULE IN COST ACCOUNTING

E5-9

Atlanta Appliance, Inc.

Statement of Cost of Goods Manufactured
For the Month Ended January 31, 2013

Materials P 8,800
Labor 7,200
Factory overhead 8,800
Total manufacturing costs 24,800
Add work in process inventory, January 1 30,000
Total in process 54,800
Less work in process inventory, January 31 -0-
Cost of goods manufactured during the month P 54,800

E5-10

Cost Element Production Cost Unit Output Unit Cost

Materials P 6,000 15,000 P 0.40
Labor 9,000 15,000 0.60
Factory overhead 12,000 15,000 0.80
Total 27,000 P 1.80 (a)
Transferred from 15,000
Immersion 25,000 1.67
Total P 52,000 P 3.47 (b)

E5-11

Amarillo Adhesive, Inc.

Statement of Cost of Goods Manufactured
For the Month Ended January 31, 2013

Materials P 6,000
Labor 9,000
Factory overhead 12,000
 Republic of the Philippines
BATANGAS STATE UNIVERSITY

MODULE IN COST ACCOUNTING

Total manufacturing costs 27,000

Add work in process inventory, January 1 25,000
Total in process 52,000
Less work in process inventory, January 31 -0-
Cost of goods manufactured during the month P 52,000

E5-12
Account
Transaction Debit Credit
Purchase of materials and Materials Accounts Payable
supplies
Materials and supplies issued Work in Process (for each Materials
to the factor department)
Factory Overhead (for indirect
materials)
Labor Cost Incurred Work in Process (for each Wages Payable
department)
Factory Overhead (for indirect
labor)
Other costs incurred Factory Overhead Various accounts
Distribution of factory Factory Overhead (for each Factory Overhead
overhead to departments department)
Factory overhead applied Work in Process (for each Factory Overhead (for each
department) department)
Units transferred from one Work in Process (receiving Work in Process (transferring
department to another department) department)
Units completed Finished Goods Work in Process (last
department)
Units sold A/R and Cost of Goods Sold Sales and Finished Goods
 Republic of the Philippines
BATANGAS STATE UNIVERSITY

MODULE IN COST ACCOUNTING

E5-13

Production Cost
Beginning Work Cost for Unit
Cost Element In Process Month Total Output Unit Cost
Materials P 200 3,328 3,528 8,400* P 0.42
Labor 500 10,000 10,500 8,400 1.25
Factory overhead 300 6,672 6,972 8,400 0.83
Total P 2,875 P 20,000 P 21,000 P 2.50

* Units completed and transferred ................................................................................................................ 8,200

600 units in process, 1/3 completed ............................................................................................................. 200
Unit output for the month ............................................................................................................................... 8,400

b. Cost in Mixing (8,200 × P10.00*) ......................................................................................................... P 82,000

Cost in Blending (8,200 × P2.50) ............................................................................................................. 20,500
Cost of goods transferred to finished goods ................................................................................... P 102,500
* P78,000 ÷ 7,800 = P10/unit
c. Cost in Mixing (600 × P10) .......................................................................................................................... P 6,000
Cost in Blending:
Materials (600 × 1/3 × P0.42) ................................................................................................................... 84
Labor (600 × 1/3 × P1.25)........................................................................................................................ 250
Factory Overhead (600 × 1/3 × P0.83) .............................................................................................. 166
Cost of ending work in process inventory .................................................................................. P 6,500

E5-14
Cost of Production Summary
Blending Department
January 31, 2013
Cost of work in process, beginning of month:
Cost in Mixing……………………………………………… ……P10,000
Cost in Blending:
 Republic of the Philippines
BATANGAS STATE UNIVERSITY

MODULE IN COST ACCOUNTING

Materials……………………….P 200
Labor…………………………...…. 500
Factory Overhead……………. 300 1,000 P 11,000
Cost of goods received from Mixing during the month……………... 78,000
Cost of production for month-Blending:
Materials…………………… P3,328
Labor………………………….. 10,000
Factory Overhead……….. 6,672 20,000

Total costs to be accounted for………………………………………….…. P109,000

Unit output for month:
Finished and transferred to finished goods………………….……… 8,200
Equivalent units of work in process, end of month,
(600 units, 1/3 complete)…………………………………………….…………… 200
Total equivalent production……………………………………………..………. 8,400
Unit cost for month:
Materials [(P200 + P3,328) / 8,400]……………………………..…………….P 0.42
Labor [(P500 + P10,000) / 8,400]…………………………………………..….….1.25
Factory overhead [(P300 + P6,672) / 8,400]…………………………..……. 0.83
Total…………………………………………………………………………………..………P2.50
Inventory costs:
Cost of goods finished and transferred to finished goods:
Cost in Mixing (8,200 x $10)……………………………P82,000
Cost in Blending (8,200 x $2.50)……………………… 20,500
(8,200 x $12.50)……………………………………………….. P102,500
Cost of work in process, end of month:
Cost in Mixing (600 x $10)………………………….…….P6,000
Cost in Blending:
Materials (600 x 1/3 x P.42)………………... P84
Labor (600 x 1/3 x P1.25)…………………..…250
Factory overhead (600 x 1/3 x P0.83) 166 500 6,500
Total production costs accounted for P109,000
 Republic of the Philippines
BATANGAS STATE UNIVERSITY

MODULE IN COST ACCOUNTING

2. Finished Goods 102,500

Work in Process-Blending 102,500

E5-15

Production Cost
Beginning Work Cost for Unit
Cost Element In Process Month Total Output Unit Cost
Materials P 600 4,800 5,400 15,000* P 0.36
Labor 1,500 15,000 16,500 15,000 1.10
Factory overhead 900 9,600 10,500 15,000 0.70
Total P 2,875 P 20,000 P 21,000 P 2.16

* Units completed and transferred .............................................................. 13,000

3,000 units in process, 2/3 completed ...................................................... 2,000
Unit output for the month .......................................................................... 15,000

b. Cost in Assembly (13,000 × P6.00*) ......................................................... P 78,000

Cost in Finishing (13,000 × P2.16) ........................................................... 28,080
Cost of goods transferred to finished goods .......................................... P106,080
* P84,000 ÷ 14,000 = P6/unit

c. Cost in Assembly (3,000 ×P6) ............................................................. P 18,000

Cost in Finishing:
Materials (3,000 × 2/3 × $0.36) ........................................ ........... 720
Labor (3,000 × 2/3 × $1.10) ........................................................ 2,200
Factory Overhead (3,000 × 2/3 × $0.70) ............................... 1,400
Cost of ending work in process inventory ..................................................... P 22,320