NAME __________________________________ DATE ____________________ SCORE __________

PROCESS COSTING
Set B
TRUE OR FALSE: Write the word true if the statement is true, otherwise write the word false

1 Process costing is most appropriate when manufacturing unique products.

2 Equivalent units are used to restate – work in process inventory to terms of

completed units at the end of the period.

3 The FIFO method combines beginning inventory and current production to compute
cost per unit of production.

4 The weighted average method separates beginning inventory and current

production to compute cost per unit of production.

5 The numerator in the formula for the unit cost excludes all beginning inventory
costs when using the weighted average costing assumption.

6 The FIFO costing method assumes that units in beginning inventory are the first
units transferred.

7 Using FIFO costing, equivalent units of production (EUP) can be determined by

adding EUP’s in Beginning work in process from weighted average EUP.

8 Continuous production losses are assumed to occur uniformly throughout the

process.

9 The cost of abnormal loss is charged to work in process accounts.

10 Normal losses when discovered at the end should not be included in the EUP

11 The cost of production report details all manufacturing quantities and costs, shows
computation of EUP, and indicates cost assignments to goods manufactured.

12 Two methods of accounting for cost flows in process costing are FIFO and LIFO.

13 The number of completed units that could have been produced from the inputs
applied is referred to as equivalent units

14 Costs of normal shrinkage and normal continuous losses in a process costing

environment are handled by the method of neglect.

15 Process cost accumulation procedure is most applicable in continuous mass-

production manufacturing environments
PROBLEMS: Write your solutions on the space provided. No solutions no points

Lawton Co produces canned tomato soup and is budgeting sales of 250,000 units for the month
of January. Actual inventory units at January 1 and budgeted inventory units at January 31 are
as follows:

Actual inventory at January 1: Units

Work in process none
Finished goods 60,000
Budgeted Inventory at January 31:
Work in process, (75% processed) 16,000
Finished goods 75,000

1. How many equivalent units of production is Lawton Budgeting for January?

2. If 100 units are 70% complete, 30 units 50% complete, 200 units 40% complete, and
60 units 5% complete, how many EUP have been produced?

Ablan Co produces a special kind of insecticides. Materials are added in the end of the
production which is the Mixing Department. For the month of March, 2016, the following data
were gathered :
No. of units
Work in process, March 1, 40% complete as to conversion cost 40,000
Started in process during the month 100,000
Transferred to the Molding Department 85,000
Lost units in processing 10,000
Work in process, March 31, 60% complete as to conversion cost 45,000
The costs corresponding to the lost units were absorbed by the remaining units.

3. Using the weighted average method, the equivalent units for the material cost were:

Complete the following process account of Lei Mfg. Co by supplying peso amount in the credit
side account indicated under (a) and (b):
Process Y
May 1, (1/3 converted) 6,000 units Completed, 16,000 units (a)
4,800
Materials12,000units@P.50 6,000 ½ completed,2000 units (b)
Labor 3,600
Overhead 5,400

4. The peso amount for the 16,000 units completed under (a) is:
 5. The peso amount for the 2,000 units ½ completed under (b) is:

The Glorious Corporation manufactures only one product in which raw material must pass
through Processes A, B, and C in that order, before completion. Inventories of Process C and of
Finished Goods on October 1 were as follows: Process C – 1,200 units 2/3 completed, P4,200;
Finished goods – 1,000 units at P3.00 per unit. Inventories on October 31, were as follows:
Process C – 600 units, ½ completed; Finished goods- 1,300 units. During October the following
transactions were completed:

2,000 units with a value of P5,000 were transferred from Process B

Direct labor applied to Process C during October was P3,100
Overhead costs for October applied to Process C were P3,200

6. The number of units completed in October and transferred to Finished goods is:

7. The processing cost per equivalent unit for October is

8. How much is the Still in Process Ending in October

9. Gyro Products transferred 10,000 units to one department. An additional 3,000 units of
materials were added in the department. At the end of the month, 7,000 units were
transferred to the next department. There was no beginning inventory. The costs for units
transferred in would be effectively allocated over:

10. Read, Inc. instituted a new process in October. During October, 10,000 units were started in
Department A. Of the units started, 7,000 were transferred to Department B, and 3,000
remained in work in process at October 31. The work in process at October 31 was 2/3
complete as to material costs and ½ complete as to conversion costs. Materials costs of
$27,000 and conversion costs of $39,950 were charged to Department A in October. What
were the total costs transferred to Department B?

11. Roger Company manufactures Product X in a two-stage production cycle in Departments A

and B. Materials are added at the beginning of the process in Department B. Roger uses the
average costing method. Conversion costs for Department B were 50% complete as to the
6,000 units in beginning work in process and 75% complete as to the 8,000 units in ending
work in process. A total of 12,000 units were completed and transferred out of Department
B during February. An analysis of the costs relating to work in process and production
activity in Department B for February follows:
 Transferred- Materials Conversion
in Costs Costs Costs
Work in process, February 1:
Costs attached ....................................... $12,000 $2,500 $1,000
February activity:
Costs added ........................................... 29,000 7,500 5,000

The total cost per equivalent unit transferred out for February of Product X, rounded
to the nearest penny, was:

The Sanchez Co has the following information in March, 2016

Opening inventory 4,000 units

Percentage of
Completion Value
Materials all P1,992
Labor 50% 1,074
Overhead 50% 846

Put in process 20,000 units

Materials value P12,000
Labor P9,984
Overhead is 100% of labor cost
Units completed and transferred to store
In Process at the end all materials 3,000 units
60% cc

12. The production equivalent for materials using Average is:

13. The production equivalent for labor and overhead using FIFO is:

14. The total cost of work in process at the end using Average is:

15. The total cost transferred out using FIFO is: