MODCOS2

Process Costing with Accretion and Lost Units

Case 1. In the manufacture of soft drinks, the syrup is often produced in one department and carbonated
water added in a subsequent process. The addition of carbonated water increases the total volume of liquid
product to be accounted for. The Mixing Department of Tiger Paint Company receives paint dye from the
Pigment Department; the dye is mixed with a liquid latex to form paint in the Mixing Department for April
are:

Gallons in work in-process, beginning inventory, 25% converted 1,800

Gallons received from Pigment Department 6,000
Gallons of latex base added in mixing Department 3,200
Gallons transferred to Canning Department ???
Gallons in work in-process, ending inventory, 50% converted 1,000

WIP, beg.
Cost from preceding department 5,800
Materials -
Conversion costs 4,095
Current period manufacturing
cost
Cost from preceding department 18,400
Materials 26,400
Conversion costs 21,105

Based on the cost of production report for the month of March, work in-process beginning was
25% complete as to conversion costs. The departmental supervisor reported that the ending inventory of
work in-process was 50% complete as to conversion costs. Also, the materials are added here whenever the
process reaches 30% completion.

Case 2. Rosalyn Division of Rosal Paint produces environmental paints in which spoilage takes place on a
continual basis. The following operating statistics are available for August.
Gallons Cost
Work in process, 8/1 8,000
(20% complete as to materials) P 15,993
(30% complete as to conversion cost) 26,386
Started during August 180,000
Materials 772,212
Labor 596,245
Work in process, 8/31 4,000
(60% complete as materials)
(70% complete as to conversion cost)
Spoiled 1,400

Scenarios:

1. Management considers normal spoilage to be 1% or less of total gallons of materials placed into
production this period

2. Management considers normal spoilage to be 0.5% or less of total gallons of materials placed into
production.
Case 3. Rommel Division of Rosal Paint produces environmental paints. Materials are added at the
beginning of the process. Inspection is done when the process is 70% complete. The following operating
statistics are available for August.
Gallons Cost
Work in process, 8/1, 30% 8,000
Materials P 79,000
Conversion Cost 44,396
Started during August 180,000
Materials 720,000
Conversion Cost 550,740
Work in process, 8/31, 60% 4,000
Spoiled 1,400

Scenarios:

1. Management considers normal spoilage to be 1% or less of total gallons of materials placed

into production.

2. Management considers normal spoilage to be 0.5% or less of total gallons of materials placed
into production this period.

Case 4. Redeemer Division of Rosal Paint produces environmental paints. Materials are added at the end
of the process. Inspection is done when the process is 40% complete. The following operating statistics are
available for August.
Gallons Cost
Work in process, 8/1, 30% 8,000
Materials -
Conversion Cost P 52,990
Started during August 180,000
Materials 730,400
Conversion Cost 503,690
Work in process, 8/31, 60% 4,000
Spoiled 1,400

Scenarios:

1. Management considers normal spoilage to be 1% or less of total gallons of materials placed into
production this period

2. Management considers normal spoilage to be 0.5% or less of total gallons of materials placed into
production.