Process costing assumptions

- Direct materials are added at the beginning of the production process

- Conversion costs are added equally along the production process.
Transferred-in Costs
- Are costs incurred in previous departments that are carried forward as
the products cost when it moves to a subsequent process in the production cycle

Example

Physical Transferred Direct

units in materials
OWIP (March 1) 240 $ 33,600
Degree of completion, OWIP 100% 0%
Transferred in during March 400
Completed and transferred out during March 440
WIP, ending (March 31) 200
Degree of completion, EWIP 100% 0%
Total cost added during March
Direct material and conversion costs $ 13,200
Transferred in (WAC) $ 52,000
Transferred in (FIFO) $ 52,480

FIFO

Physical Transferred Direct Conversion

units in materials costs
OWIP 240
Transferred in 400
To account for 640
Completed and transferred out
From BWIP 240 - 240 90
Started and completed 200 200 200 200
WIP, ending 200 200 - 160
To account for 640 400 440 450

Step 3:
WIP, beginning $ 51,600 $ 33,600 $ - $ 18,000
Cost added $ 114,280 $ 52,480 $ 13,200 $ 48,600
Total cost to accounted for $ 165,880 $ 86,080 $ 13,200 $ 66,600
Step 4: Cost per EU 131.20 30.00 108.00

Step 5: Assignment of costs

Completed and transferred out
OWIP 51,600 33,600 - 18,000
Cost added to BWIP 16,920 - 7,200 9,720
From beginning 68,520
Started and completed 53,840 26,240 6,000 21,600
WIP, ending 43,520 26,240 - 17,280
Total cost accounted for 165,880 86,080 13,200 66,600
 WAC Step 1 Step 2

Conversion Transferred Direct

costs Physical units in materials
$ 18,000 OWIP 240
62.5% Transferred in 400
To account for 640
Completed and transferred out 440 440 440
WIP, ending 200 200 -
80% To account for 640 640 440

$ 48,600 Step 3: Summary total costs Total costs

WIP, beginning 51,600 $ 33,600 $ -
Cost added 113,800 $ 52,000 $ 13,200
Total cost to accounted for $ 165,400 $ 85,600 $ 13,200
Step 4: Cost per EU 133.75 30

Step 5: Assignment of costs Total cost

Completed and transferred out 120,890 58,850 13,200
WIP, ending 44,510 26,750 -
Total costs to accounted for 165,400 85,600 13,200
Step 2

Conversion
costs

440
160
600

$ 18,000
$ 48,600
$ 66,600
111

48,840
17,760
66,600
WIP, beginning inventory
Degree of completion, be
Transferred-in during June

Flow of production
OWIP
Transferred in
To account for
Completed & transferred out
CWIP
To account for

Schedule of costs
OWIP
Costs added in current period
total costs to account for
cost per EU

Assignment of costs
Completed &transferred out
CWIP
total

FIFO

Flow of production
OWIP
Transferred in
To account for
Completed & transferred out
OWIP
Started & completed
CWIP
To account for

Schedule of costs
OWIP
Costs added in current period
total costs to account for
cost per EU

Assignment of costs
Completed &transferred out

Total from OWIP

Started and completed
Total FG
 WIP, ending
total costs accounted for
WIP, beginning inventory
Degree of completion, beginning work in process
Transferred-in during June

Flow of production Physical units trensferred in DM Conversion

60
Transferred in 100
To account for 160
Completed & transferred out 120 120 120 120
40 40 - 30
To account for 160 160 120 150

Schedule of costs Total production transferred in DM Cnversion

84,000 60,000 - 24,000
Costs added in current period 206,400 117,000 27,000 62,400
total costs to account for 290,400 177,000 27,000 86,400
cost per EU $ 1,106.25 $ 225 $ 576

Assignment of costs
Completed &transferred out 228,870 132,750 27,000 69,120
61,530 44,250 - 17,280
290,400 177,000 27,000 86,400

Flow of production Physical units trensferred in DM Conversion

60
Transferred in 100
To account for 160
Completed & transferred out
60 - 60 30
Started & completed 60 60 60 60
moi dua vao trong ky 40 40 - 30
To account for 160 100 120 120

Schedule of costs Total production transferred in DM Cnversion

69,000 45,000 - 24,000
Costs added in current period 203,400 114,000 27,000 62,400
total costs to account for 272,400 159,000 27,000 86,400
cost per EU $ 1,140 $ 225 $ 520

Assignment of costs
Completed &transferred out
WIP, beginning 69,000 45,000 - 24,000
Costs added to BWIP 29,100 - 13,500 15,600
Total from OWIP 98,100
Started and completed 113,100 68,400 13,500 31,200
Total FG 211,200
 WIP, ending 61,200 45,600 - 15,600
total costs accounted for 272,400 159,000 27,000 86,400
Flow of production Physical units trensferred in DM Conversion
OWIP 7,500
Transferred in 22,500
To account for 30,000
Completed & transferred out 26,300 26,300 26,300 26,300
CWIP 3,700 3,700 - 2,220
To account for 30,000 30,000 26,300 28,520

Schedule of costs Total production transferred in DM Cnversion

OWIP $ 3,767,960 $ 2,932,500 $ - $ 835,460
Costs added in current perio $ 21,378,100 $ 7,717,500 $ 9,704,700 $ 3,955,900
total costs to account for $ 25,146,060 $ 10,650,000 $ 9,704,700 $ 4,791,360
cost per EU $ 355 $ 369 $ 168

Assignment of costs
Completed &transferred out 23,459,600 9,336,500 9,704,700 4,418,400
CWIP 1,686,460 1,313,500 - 372,960
total 25,146,060 10,650,000 9,704,700 4,791,360

FIFO

Flow of production Physical units trensferred in DM Conversion

OWIP 7,500
Transferred in 22,500
To account for 30,000
Completed & transferred out
OWIP 7,500 - 7,500 2,250
Started & completed 18,800 18,800 18,800 18,800
CWIP moi dua vao tron 3,700 3,700 - 2,220
To account for 30,000 22,500 26,300 23,270

Schedule of costs
OWIP 3,635,460 2,800,000 - 835,460
Costs added in current perio 21,395,850 7,735,250 9,704,700 3,955,900
total costs to account for 25,031,310 10,535,250 9,704,700 4,791,360
cost per EU $ 343.789 $ 369 $ 170

Assignment of costs
Completed &transferred out
WIP, beginning 3,635,460 2,800,000 - 835,460
Costs added to 3,150,000 - 2,767,500 382,500
Total from OWIP 6,785,460
Started and completed 16,596,431 6,463,231 6,937,200 3,196,000
Total FG 23,381,891
WIP, ending 1,649,419 1,272,019 - 377,400
total costs accounted for 25,031,310 10,535,250 9,704,700 4,791,360
17-39
conversion cost: complete 70%--> testing process complete 70%
DM added when testing process complete 90%--> DM added 0%
transferred in: always 100% (answer for 1a,1b)
 Physical Direct Conversion
WACC units materials costs
WIP, beginning 60
Started during April 510
To account for 570
Completed during April 450 450 450
WIP, ending 120 120 18
To account for 570 570 468

Direct Conversion
Total costs materials costs
WIP, beginning $ 1,686 $ 1,530 $ 156
Costs added during April $ 29,394 $ 17,850 $ 11,544
Total costs $ 31,080 $ 19,380 $ 11,700
Costs per EU $ 34 $ 25

Assignment costs
Completed during April $ 26,550 $ 15,300 $ 11,250
WIP, ending $ 4,530 $ 4,080 $ 450
To account for $ 31,080 $ 19,380 $ 11,700

FIFO
Physical Direct Conversion
WACC units materials costs
WIP, beginning 60
Started during April 510
To account for 570
Completed during April
From BWIP 60 - 36
Started and completed 390 390 390
WIP, ending 120 120 18
To account for 570 510 444

Direct Conversion
Total costs materials costs
WIP, beginning $ 1,686 $ 1,530 $ 156
Costs added during April $ 29,394 $ 17,850 $ 11,544
Total costs $ 31,080 $ 19,380 $ 11,700
Costs per EU $ 35 $ 26

Direct Conversion
Assign costs Total costs materials costs
Completed during April
WIP, beginning $ 1,686 $ 1,530 $ 156
From BWIP $ 936 $ - $ 936
Started and completed $ 23,790 $ 13,650 $ 10,140
WIP, ending $ 4,668 $ 4,200 $ 468
To account for $ 31,080 $ 19,380 $ 11,700