MOUADTER re Toa 80 a ws RR 9 ND Fhe we BE eA a EOE NEE PROCESS COSTING LEARNING OBJECTIVES ‘Upon compen a he caps, ou soa Be bt to 1 Detie procs costing nd diferait rjbonkconting Defic the charac roves co ston {Cant ort equal presicton Discs and prepte cont of pation spon ‘Toe basic purpne of cot aco I the secnulation of data designed 0 provide mantgenet wih accwate information on th cost f mavulacury 2 ‘Prodi. The proprio accounting scm for garlands on ‘are of manuBecrng opr a 5 hen a minuferring proces iavaves the cones redtion of etic! ‘nis ater than dsingishable jo lam, tae ean be mje encanto Whee es if ovis sto fish cas the metry, ces ney as, in sing poeess cong all mancfctrng cine ne local Et 21,000 a 2 600 i 9 14,000 * » 52.000 us Problem 2 ‘Ths Caper Corpertion cna cots forthe month of P15,750 formate, P 40.950 lator and P9500 for cvercad, Thoe as te beginnng wos in poco, Invemery, 9.00 uni wore completed snd Waafemed and 2 00 were hpricot ‘he on ofthe poe, 34 comple Requires: | Compute the sutalent production othe month 2 Compute the tse cor fea met 6 38. Problem 3 ‘Comps the equivalent production forthe month fe ach ofthe folowing eaxce (Caret Seated in proces 50a complated 000 wi; wot poses nd ‘pened 1.000 wats 3d complied” Allmaterie ne Sade the Feginnng ote prs Case 2 Rees om preeling deparinet~ $0000 unis; completed 4,000 Us. wesk i process ci of pesid, 6.000 mat tcp AI mates are seat te ed of tho proses. Case 3S m process $8.00 ns comple 2900 uns: eloing imeaory uote process 3.000 tne Vs comple and 300 uy 12 ‘Speed 796 of the materia are add atthe beaming ote fees and 255 when he process? completesGHAPTER 10 AVERAGE AND FIFO COSTING LEARNING OBJECTIVES ‘port compl ft chap, you shuld bebe ‘Discus the efx of bepening workin process inventors 1 Disas the dftrences erent weighed erg and fio mad ed to acca fr being wa in rear vee Discus howto eal wih ped uence cost stem, Discus how rap and ass mateal phan proces cont sem * The amples inthe previws chapter are without Begining wok in process invearica This station wuld probably ext ony inthe fet nth os new ‘ahs or na nw practice process Bena fs uu cosmos ands unis ll esr sill b in pocese tthe eo of he pried. The endng work a proce Invezry ee previour period wil become tiptoe Begining work a poees ‘men ‘The ese of Dsinig work in process vetoes creates a proble fa proces esting because fh flowing Queton tht mat be cnr 1. Should dsinction be mae brwcen comple wis ow bexiniag we in Process ivtr and coplaed wns Pom cuent pod? 2 ‘Should alte nis complied dng te cre pol be inlet 100% in ssialt production reps o te age of eaptaon of begltiag werk ft "owl sca fe oping werk be added 3. "Soni he on ing wok in proce avery be add 1 cost sich fave een ado poco nig core pond area “Ces REN Srna pat? ‘Te answers 1 thse guess will dapend on the method choco w acount for “egsing wo in procs imeciory - weighed averigs costing or Hints, stout (FIFO) costing. Under he weighed avrags metho no dain sade bees Scmpanut fo oi mm opt re sa al completed une were sated and completed dung th prod. Under ff meta, unt nthe beginning workin oe io, Process Inventory a epee 312 pak 6 1 0 Cost Accounting METHODS OF COSTING UNDER PROCESS COS! 1. HIEO metho - uner tis metod, tere i an assumed fw of mamacting fpeebons anos ch ts cenaiore tht thas hts WEA ar st placed mo prosas re presumed foe th fst ones completed aad those tht ae Tit ope are ces rasta et aceite)! The workin proscs bagining te dearest wi gi rpate crops ris aon poston 2. Tam rl cmpled afer wil ve nn competion edwoqiriat padadon ns 2. AVERAGE mated - ois is method, ren po seed fl ‘Stung oti. ovo bx mus of eSpace ‘mot onth and asc rascnttie Sree cnt by ding th to) ‘lon of con by he eins pon bed won he om of rhe ‘Siok i ple ry ae he war Sled pros ing T. the compwaon ofthe equtalen produto, the stage of competion of the work proces bepnnng st gnered andthe tl amt complied and {tenered strane he pros ae cosas have 100% completion A. Computation of equivalent producti 1. FIFO - work dene lat morth on the unis i proces, beaning is Coesered. The work dane needed to ake the work npr 100% the Werk done asgne orth crtet moth. {1GD%- work dont month) 2. AVERAGE - vod done let month otto unis i proces. ogining i ignored and nt coset nthe computation of the equals protonChapter 10 Average and FIFO Costing 313 B. Compuution o eit cos: 1. miro - Tiles a fet wa done 2. aveRAcE ~ if valent uns in bogey Equal TH uot Wor one G. Compuinion of the cont of sods tramerred out and the cox of ang {ing FIO, we cont pod ante ot ein te sm of tefl ce ‘8. The cot ards inc beeing inverted bapiing oe ped ', Ths cane peo cons o comple Begining ivesoy, which et the ‘quaeat unis to complete tein tvenry tense car eset ‘ice computed fe FIFO (© Thecowts tart and complete ui, cleat by oulipying the manber 0 mere comet une sont computed = ae ‘ang FIFO, te cost of goo ending ventory eins th equines in zig vey ie lt ure cO8 ing laa eng, the com of gi are out ets tks ‘aad eter the welgasdrage icons SOE ‘vin weit avers the cot of gods n ending enor ins the eval ‘isin entigimvenory mes the weit avreg icon 1. Simumanzthe flow of phos eis 2. Compute ule! uate pode sig FIFO, ths mes ding he ogra unis f work Jone 4, Compt uta bepiming isnt Bi. stati compte ute (Wonk ans il in cdg ventory 314 Cost Accounting, Using weit aerns, tis monn aasing he glint unit f wrk aon a” ‘he cet pra t the cai ala ef wot ateay Jove te ea, frwcnon fom the pnts ped 53, Samar th ttl costs ob est for. “Toor sats 0 be soured forte he cori he pining er i rs 4. Comput cons pe equivalent ILLUSTRATIVE PROBLEM 1 ‘COMPUTATION OF EQUIVALENT PRODUCTION Speer mene ae att Aepsrmen asada 00% the earng ofthe rons ‘eras Labor & OH 2) Aversgemetiod cual = WD EB WDB Uniseomplted — TROW0 100% 18000 100% 18.000 Unie cod oo i0ise Jom ‘sume S00 Bn Zim Bean “ake note dat under everags metal, ths work dove on he nothin paces, Veshning ne considered in he compan the gelant progucion. aul MD OR DR sa a0 ‘No material as aed oth wits in roses, oiming during the moo bees send eflas wont, te unis Wereaeady 10U%econplce sw mersChapter 10, Average and FIFO Costing 315 MLUSTRATIVE PRODLEM2 ‘The flowing forotion rls to te epersons of LVN Company fet moot faust a rot Ave | (4 compl) 1000 Rectalesbee Ko Comisod mies ao Inpenas Aug 3] @PMcmplas) wo iePomat Conus ee pt i Pus gic) ieee son no00 Coreen Ste 30 “Maca ihis cgmreent re nad 100% tbe begrning ofthe pees [SOLUTION - averse Method TENN COMPANY Cest ef Pedacon Root forthe month ced Ange, 2012 Miiale Later 08 Aaa oo wp ie MD a nssimpoces tes an tts nnd En 2a nis complet Hoo 00% £300. 00% nisin nd “an tome aaa Sma ao ons us ae deoanest Cat rn pring Septet tnprosee, Aap P is0 “rte igh nth *_alae9 ERS p_t0s0 Cost sxkded in the department, f pecs aa “sera 3.00 ober & vei 3 Added during the month 2 on nom 9 overt iita ica amon. © ‘sue ere Sones epic Pop pipe pti om THEO mos 2 Average method‘Chapter 10 Average and FIFO Costing, SOLUTION (iro Meriop DENVER COMPANY cone Prsoe Ser he ment ended pl 0.2012 ‘sini Dormont MatrsltJabor 808 Quam Schedule Atul «= WEED EP Sstesers shane Vas ompit From IP bse Saned eonp, 60000 100% 60.000 190% 6,000 ‘iis Pen goom tam loon "gare Se smo iano ‘000 Comm pea » ose (Cos aided tdeprtnet Macrae 320.000 400 Gaver cot tc o00 200 “Tee oo snd #50000 400 ‘oulcoms pteacemmed fr E80 PS ‘Coteactouni og lls Completed & arse Stare & sampled 36000 360.000 ed 000 Comerton cots inno __vo.0% ‘Tox cor ar ul for Fanon ‘ateals = 0900 = 400 ‘m0 CComenion coms = 120000 = 200 sso 319 ing Dp eam st a Units IP, beg. ae aes 3s 23 vaca ae Soe te vcs ‘o i ‘Cosy charged the department Cos mpc, bee Com on posing doparnest (Cot alae nthe depart Socom ed “Total esto be area oe ‘Compl & vant "Hom. bas Cont th P (cata hs oath Cost Accounting, Peer mae 10% om 100% ‘Cantrie oe 30000. F203 300 Received cumple In procs en “Coe ram preceding dot Macrae “Tal cou acne fe 10000 a0 Completed & sanstered = (Rs 10 0) + (2.00 « 1030)Chapter 10 Average and FIFO Costing 3a Journal entries — FIFO. 1. Workin Procees— Machining Dept 520.000 WontnProcens Pshing Dope ‘a0 ‘Noerats 0000 2. Workin Proce Meng Dapt 150000. ‘Wonk Process ~Pathing Dept 138300 PaprlUFeton Oerivod Apes s2sa00 3. Werk in Proce ~Prshing Dt 0000 Wort Paces heshng Dope senoon 4 Phd Goad 1500 “ork Proce Piching Dept 614500 Cat ot Predation Rep Forte owt ede Api $0, 2012 ‘Machining Dearne ‘Quanto Shed cml MDE MDOP Cts nrc . Unite Snes sam 009 Ute complet S00 4.000 100% 60,000 Unt pecs, brio pao "25% "S099 man 00 on ‘Ca sedi te separ {ater oven 0 ‘ex oo ed ray “Toa cots oe acca or Poe 322 Conpied tanstarad Tn proces ee Tabor dover “Toa cote se ese foe Finishing Department ‘Quant Shaiule cna Unis in provss os, B00 Unease sun fo ns completed tone proceed ‘00 at 200 30.00 ‘Cot preceding Sparen 1. bepenina feed éaring the mosh, (Cot sd ithe parent 1, begining crate {tor & overhead ‘Added dating he ott Tabor & ovriend “Taal com aed ‘Toul eons tobe acouted for Cost Accounting > 360000 xap00. 7 elon sna Pasoan0 Mons Labor OU woke = WD EP tone 100 tore 200) eo P_s9100 25000 21500 spo00 L980 ion _23tes ae asus Foam = Piodins Poise 26830 an nan{Chapter 10 Average and FIFO Coning as octet Tach poins o wmuwo | = son ta sto asnsnon = 1080 Lae tnt asap = 20808 Side Jonroal envi — Average 1 Wr Pres en sane Wk race cg beg 2 wt mre Mainig Do Loe Toate ae pashan Eorantane Ona ie saat 3k nPosPrihgD "sono wea ponte Neat ne aon Petal Cod cass Wola sins Conplett &tanafrl = (6,000 10465) +2600 10.165) fog te eachioig Sperm, te co of pracaon repo ng FIFO and ‘hcesvenge sc the tune toe hee be ao bagig Cvenoner The ‘Gutlstprfichon ane alleen fret t nts ented oat end te ‘lag nttty ae nal waa FIFO cr eiged-veage ted (Real a SS ie an era mos {Ser cans = weed avenge of bagiaing ema ad caret pried oun iF Bo epg Im, he met mene omen fa 324 Cost Accounting ‘The weiahtaverge cost of production reper fr the fins depart i Contant site - Tne rzsted ex ost 8.000 = on06ss ‘Under te aston ht unis lot ware covered at the begining daring the prosang. the cx af th let uit ll be sborbed by th nite ceived em ets {oz (000) which e apresomed byte une cved & compl sad the unt in rss end (40,000 18,000) asamed farther ta he a ne ae ro he nie saved ony. Howoter, 0 @ uma! thatthe lx nis are fom the rosas, tepiming snd the received. tea the denominator lode he 2,000 In Prosay, bs, 2080 + 6,00 lee 2.000 78,000" uxt ie ie prevou example ‘ihc te tna ont wore ucovered othe ‘cd he Tot ume A snumedo 8 loin oly Fem i vase and ts or this son why the cat ofthe et uit fo tin prous ogous ved irieg the peo. than he proton 1 il share nthe ort of tect the ot unis. Then proce oa wal nts the costo te dns dcvered athe end. Under the average mead the la procs, begining wil sharin the absorption ‘oft os ofthe let its The im proes, ed wil sharm the co Oe lost uns Sth ln untae sicated te bepning er during fe pocean IF he ot uns fre overed tthe code he proces th est il Bo abarbd bythe campltd 326 B. AVERAGE METHOD Cost Accounting, DENVER COMPANY ‘Cento Preacon Ropor forthe month cd Ape 30,2012 inching Depart Teed cee sitet Aajistnetfrloe wits “Tota cons ob sccm fo In prem, end Maurls Lahr 0H ype wD ee 100% 60.000 100% n.000 Too% 18000 0% T2800 znoco 27300 92001512491 3.09 Bam Ss01000 acy udsaaes Eat Eos suisse 9s46Chapter 10 Average and FIFO Costing ‘Computations:- Unit ot ‘Cos fen preceding sageo = 575 ano Maree momesnon = 1512821 75500 Latereont mro0=193800 7280) _Adjtea fr at wits s78.0-5975 7000 = otssans 008209 34 Cost Accounting PROMI ef Ao al isla Problea 1 ‘A company's mds show the following information conseming the workin proces iechontedl pee ‘8 aging invemory - 600 uals (materi re 20% complete, coveson ets 50% complet), 1, Tansee ot 40,00 us ©. Fling inventory - (mts are 10% complete, conversion costs ae 15% some) 4 Started his mont 42,000 its ogiemete 1. Compute eqivaler wis fr materi nd conversion co ung FIFO. 2. Compate the eqalent ants for rei ahd ceeerion cost wing vere Probiem 2 4 sorpanys rod show he ollonns information coeceming the work n proces Ssnanenbls sat 8. Begining iment ~ (trials ae 15% comple; omverion cot ae 2Siveanmice) 1. Transfodot -30(00 unis, {© Ending investor = 10,00 ans (raters ae 20% comets conversion seats te ea compe {Stared his month 35,000 wits. 1. Comput euivelent unt formate ad comers cots wing FIFO, 2 Compu the equivalent unite for matrals and comer cars wing,