COST ACCOUNTING REVIEWER

1. WEIGHTED AVERAGE (W.AVE)

* You can use this with or without spoilage. If there's no spoilage, stick to the usual process.

Types of Spoilage

1. Normal Spoilage/ lost

2. Abnormal Spoilage/ lost

PRODUCT COSTS COMPOSED OF THE FF:

1. Direct Material ( DM)

2. DIRECT LABOR (DL)

3. FACTORY OVERHEAD OR OVERHEAD (OH)

CONVERSION COSTS = DL + OH

• FIRST DEPARTMENT

Production Report are composed of the ff:

BWIP ( if there's already previous operation)

Started Units
THEIR UNITS ARE ALWAYS EQUAL.
Transferred Out/ Completed Units
If there's any missing items, workback ka
EWIP
lang.
Normal Lost

Abnormal lost
EXAMPLE: 1 ( Without Spoilage)

BWIP ( if there's already previous operation) 10k

Started Units 20k

THEY SHOULD EQUALS ALWAYS
EQUAL
Transferred Out 20k

EWIP 10k

EXAMPLE: 2 There's missing items.

BWIP ( if there's already previous operation) 10k

Started Units 20k

Transferred Out: ?

EWIP 10k

Solution:

BWIP and Started are 30k in total

EWIP is 10k, so magkano kulang mo? Dapat equal siya sa taas. Edi ang nawawala is 20k para 30k sa taas,
30k sa baba. Gets ba?
EXAMPLE: 3 With Spoilage

BWIP ( if there's already previous operation) 10k

Started Units 20k

Total: 30k

Transferred Out 19, 500

EWIP 10k

NORMAL LOST: 200

ABNORMAL LOST 500

Total: 30k

NOTE:

Kapag may Spoilage, yung adjustment ay sa transferred out para equal pa rin sila, kaya kung mapapansin
mo, ang transferred out ay hindi na 20k

Example 4. WITH MISSING ITEMS

BWIP ( if there's already previous operation) 10k

Started Units 20k

Total: 30k

Transferred Out 19, 500

EWIP 10k

NORMAL LOST: 200

ABNORMAL LOST ?

Total:

Solution:
Yung taas mo is 30k, then yung missing sa baba ay abnormal lost pero given na ang lahat. Dapat equal
siya sa taas na 30k, so magkano kulang, edi 500. Gets ba

30k - 19.5k - 10k - 200= 500

PAG KUKUHA KA NAMAN NG EQUIVALENT UNITS OF PRODUCTION (EUP) DIYAN KA TITINGIN SA

PRODUCTION REPORT MO. TIGNAN MO YUNG COMPONENTS NIYA TAS TINGIN KA SA PERCENTAGE OF
COMPLETION. SA PERCENTAGE OF COMPLETION MINSAN GIVEN ANG BEGINNING PERCENTAGE OF
COMPLETION AT ENDING OR YUNG CURRENT % OF COMPLETION.

NOTE: USING W.AVE

✓ Beginning % of completion is ignored.

✓ look at ending/ current % percentage of completion for computation of EUP

✓ Beginning costs and current Costs are combined to get the Unit cost

EUP: Di ba during end of the month meromg mga process na di natapos, pero yung process na yan kahit
di pa tapos ay may costs na diyan galing sa DM, at CC pero kulang pa, kaya yung mga di natapos need
mo sama sa computation ng product costs mo or unit costs mo. Kaya meron kang percentage of
Completion. Ilang percent ng DM at ng VC mo ang nalagay mo for your Ending Work In Process.

EXAMPLE:

QUANTITY: COSTSBeg, current

BWIP 10 000

STARTED IN PROCESS 20, 000

TRANSFERED OUT TO NEXT DEPT 20, 000

EWIP 10, 000

Percentage of Completion Beg/Ending

DM 100%, 100% 100k, 50k

DL 45%, 50% 60k, 45k

OH 55%, 70% 30k, 20k

EUP:

Yung composition ng EUp mo ay

Transferred Out ( T.0): Units x % of Completion

EWIP: Units x % of Completion

Spoilage ( If Any): Units x % of Completion

EUP of Material

T.O: 20k x 100% = 20k. Why? Transferred out is always 100% kasi ttransfer mo na yan sa next
department. Pag ttransfer na, ibig sabihin tapos na kaya 100%

EWIP: 10K X 100%= 10K. STATED YUNG % OF COMPLETION NA 100%

EUP OF DM; 30K

UNIT COSTS OF DM = (Beg. costs + current Costs) ÷ EUP

(P100k + P50k) ÷ 30k units

(150k ÷ 30k)

= P5.00

EUP of DL

T.0: 20k x 100% = 20k

EWIP: 10K X 50% = 5K

EUP: 25k

EUP OF OH

T.0: 20K X 100% = 20K

EWIP: 10k x 70% = 7000

EUP: 27K

KAPAG MAY SPOILAGE, KASAMA RIN SA COMPUTATION NG EUP YUN.

Scenario 1. Kunwari sabi sa problem ang Materials ay added at the start of the process, edi 100% na siya
sa EUP mo. Kaya pag nag-compute ka ng Spoilage ay multiply mo rin siya sa 100%
Scenario 2.

Ang Materials ay added at the beg of the process tas ang CC ay incurred evenly. Ibig sabihin 100% ang
Materials mo kasi nailagay mo na siya Process na yun, pero ang CC ay hindi kasi evenly raw incurred.
Kaya ang spoilage ay based sa % of Completion ng CC. Kung ano ang % of Completion ng CC, ganun din
ang Spoilage.

Scenario 3. KUNWARI NAMAN MAY INSPECTION POINT.Yung spoilage ay made-detect daw pag 40% na
ng Process. Materials added at the beg tas ang CC ay incurred evenly. Ibig sabihin sa EUP mo, ang
spoilage ay multiply mo sa Materials ay 100% pa rin pero pag CC na, multiply mo siya sa 40%. Hindi sa
percentage of Completion ng CC. Ibig sabihin magkaiba ang % of Completion ng CC at ng sa Spoilage sa
scenario na ito.

TOTAL COSTS TO BE ACCOUNTED FOR =

( Beg Costs + Current Costs) ng product costs mo. Again ang product costs ay DM, DL, at OH.

COST OF TRANSFERRED OUT UNITS

Note:

✓ Hindi kasama sa Transferred out ang Abnormal Lost.

✓ Normal losts ay kasama sa Transferred out.

Yung composition ng Transferred out costs ay

• Costs without losts

• Losts

Yung total niyang dalawa ay Costs of TRANSFERED OUT

Formula:

• COSTS WITHOUT LOST=

= (T.0 units x total unit costs)

✓ Yung total unit costs ay total ng unit costs ng DM at CC mo.

• Losts=( Normal lost units x total unit costs)

COSTS OF EWIP
Formula:

ENDING EUP of your product costs multiply to their respective unit costs.

Tingin ka sa EUP mo, di ba may computation ka ng EWIP x % of Completion, ang sagot doon ayun ang
kukunin mo tas multiply mo sa unit cost niya. Kunwari sa materials, punta ka EUP, di ba makikita mo
result ng EUP EWIP mo ay 10k, multiply mo ngayon sa unit costs niya na P5.00. tapos same process lang
gagawin mo sa DL at OH mo or CC mo. Gets ba

Total mo yan lahat tas ayan na ang Ending EWIP mo.

Total Costs Accounted for = (T.0 costs + EWIP costs). Yung kinumpute mo kanina na costs of T.O at Cost
of EWIP.

Pag may Abnormal lost ay kasama rito sa total costs Accounted for. Diyan siya lagi.

= Abnormal Losts units x total unit costs.

SUBSEQUENT DEPARTMENT

Example na kunwari tapos ka na sa unang department. Yung transferred out mapupunta rito kasama
ang costs niya. Kaya magkakaroon ka ng TRANSFERRED IN COSTS. 100% to lagi sa EUP mo dahil 100% as
to DM at CC mo yan di ba at galing yan sa Transferred out ng First department .

SAME PROCESS LANG NAMAN. DAGDAG KA LANG SA EUP MO NG " TRANSFERRED IN". Maya sa EUP ay 4
na kukunin mo.

1. TRANSFERRED IN

2. DIRECT MATERIAL

3. DIRECT LABOR

4. OVERHEAD

Pag may spoilage ay laging 100% sa Transferred In costs mo.

Sa Total unit costs mo naman, add mo lang ang makukuha mong unit costs sa Transferred In

Unit costs of T.I=( BWIP COSTS + Transferred In costs) ÷ EUP

FIFO COSTING

Yung kinaibahan lang nito sa W.Ave ay hindi pinagsasama ang Beg at current month.
Note:

✓ Sa pagkuha ng unit costs ay di kasama ang BWIP costs. Current month lang ang titignan mo.

✓ Pinaghihiwalay ang Begining at Current units. Kaya titingin ka lagi sa Transferred out At BWIP units.

EXAMPLE: 1

BWIP ( if there's already previous operation) 10k

Started/Completed Units 20k

Total: 30k

Transferred Out:

• FROM BWIP 10k

• Completed- Currentl month : ( 20k - 10k) = 10k

Same illustration and Example sa W.Ave kaya 20k ang T.0

EWIP 10k

NORMAL LOST: 200

ABNORMAL LOST 500

Total: 30k

KUNG NAKITA MO, DALAWA COMPOSITION NG TRANSFERRED OUT. BWIP AT CURRENT MONTH SILA.
YUNG BWIP AY MAKIKITA MO SA TAAS NA BWIP tas ang current month ay less mo lang yung sa current
para makuha or pag may missing, same process as W.Ave, workback ka lang.

TINGIN KA SA TABLE SA W.AVE. SAME ILLUSTRATION.

Sa EUP SA FIFO, KASALI NA ANG % OF COMPLETION NG BEGINNING. DI BA SAW.AVE AY DI NA

PINAPANSIN, DITO PANSININ MO ANG BEG AT ENDING % OF COMPLETION KASI NEED YAN SA EUP.
✓ SA BEG % OF COMPLETION GANITO GAGAWIN MO. KUNWARI GIVEN SA % OF COMPLETION AY BEG
60%, ENDING 80%> GANITO GAGAWIN MO.

KUNWARI SA MATERIALS EUP

COMPOSITION NIYA AY

• BWIP

• STARTED - CURRENT MONTH ( ALWAYS 100%)

•EWIP

•ABNORMAL LOSTS ( IF ANY)

• NORMAL LOSTS ( IF ANY)

Sa spoilage same lang sa W.AVE ang treatment sa kung anong percentage ang gagamitin mo.

So, balik ka sa example ko. Beg % of completion ay 60%.

Beg 10k x 40%= 4k

Bakit 40%, di ba nakalagay 60% ang % of Completion? Ganito Kasi yan, kaya 40% ay ibig sabihin last
process ay 60% na ang natapos mo, kaya magkano na lang kulang para maging 100? Edi 40%. Gets ba.
Basta yung beg % of completion mo ay minus mo lagi sa 100% tas ang lalabas ay ang gagamitin mong %
of completion.

UNIT COSTS

=( Current month costs ÷ EUP)

Kunwari Materials. Hanapin mo current Costs niya tas divide mo sa EUP niya.

TOTAL COSTS TO BE ACCOUNTED FOR

= SAME PROCESS LANG SA W.AVE

KAYA MANGYAYARI AY

= ( beg costs + current month costs)

COSTS OF TRANSFERRED OUT

Nahahati siya sa dalawa tas ang total nung dalawa ay ang total costs of T.O
• COST OF COMPLETED BWIP

• STARTED AND COMPLETED - CURRENT MONTH

COST OF COMPLETED BWIP

= BWIP OF EUP. ( Ito yung computation mo sa EUP ng Beg) x Unit costs

DM AT CC YAN HA SAME PROCESS TAS TOTAL MO

+ BEGINNING COSTS

STARTED/COMPLETED - CURRENT MONTH

= (STARTED UNITS X TOTAL UNIT COSTS)

YUNG SPOILAGE AY INCLUDED DIN DITO SA TRANSFERRED OUT.

= NORMAL LOSTS X TOTAL UNIT COSTS

Add mo silang lahat ang total ay COSTS OF TRANSFERRED OUT UNITS

COSTS OF EWIP

Tingin ka ulit sa computation mo ng EUP sa EWIP MO

= (EWIP OF EUP X UNIT COSTS)

DM AT CC YAN

TOTAL COSTS TO BE ACCOUNTED FOR

= (Beg costs + CURRENT month costs)

TOTAL COSTS ACCOUNTED FOR

= ( COST OF T.O + COSTS OF EWIP)

Pag may Abnormal Losts add mo lang katulad ng sa W.AVE

= Abnormal Losts units x TOTAL units costs

KAYA MANGYAYARI ay

= Costs of T.O + Costs of EWIP + COSTS OF ABNORMAL LOSTS (IF ANY)

SUBSEQUENT DEPARTMENT/ NEXT DEPARTMENT

SA EUP MO AY KATULAD AA W.AVE NA MAY TRANSFERRED IN COSTS SA SUBSEQUENT DEPARTMENT.

SAME PROCESS LANG SILA SA TRANSFERRED IN COSTS. Always 100%. Walang beg at current month
diyan.

SA UNIT COSTS NAMAN AY SAME PROCESS LANG SA FORST DEPARTMENT MALIBAN SA TRANSFERRED IN
COSTS. HINDI MO SASAMA ANG BEG COSTS SA TRANSFERRED IN COSTS PAG KUKUNIN ANG UNIT COSTS.

TRANSFERRED IN UNIT COSTS = (Transferred in costs from prior or previous department ÷ EUP)

NOTES:

✓ SA W AVE AT FIFO, HINDI KASAMA SA TRANSFERRED OUT ANG ABNORMAL LOSTS

✓ KASAMA SA TRANSFERRED OUT ANG NORMAL LOSTS