Let us pray….

“ Be committed to the process

without being emotionally
attached to the result.” – Hal Elrod
 Cost of Production
Chapter 11
Report – Average
Costing
 Compute equivalent units under Average
Learning Costing
Objectives • Complete the four steps to prepare a
production cost report – under Average
Costing
 This combines rather than separates
Average completed units from beginning work in
process and from new production.
Cost
 • Percentage of completion from beginning Work
in Process is ignored.
Average
• Cost is computed by adding the cost of each
Cost category for the period and divide it to each
EUP.

• Both completed and Ending Work In Process are

valued using the same average unit cost
 Illustration: In June, Rodayo Manufacturing had the
following : On June 1, it had 100,000 work in process which
are 40% complete. During June, 800,000 units were placed
into production and Rodayo transferred out 700,000 units. As
of June 30, 200,000 units that were 60% complete as to
Compute conversion costs and 100% complete as to materials were in
ending work in process.
Physical
Units.
 Illustration: In June, Rodayo Manufacturing had the
following : On June 1, it had 100,000 work in process which
are 40% complete. During June, 800,000 units were placed
into production and Rodayo transferred out 700,000 units. As
of June 30, 200,000 units that were 60% complete as to
conversion costs and 100% complete as to materials were in
Compute ending work in process.
Equivalent
Units.
 Illustration: In June, Rodayo Manufacturing had the
following : On June 1, it had 100,000 work in process which
are 40% complete. During June, 800,000 units were placed
into production and Rodayo transferred out 700,000 units. As
of June 30, 200,000 units that were 60% complete as to
conversion costs and 100% complete as to materials were in
Compute ending work in process.
Unit Cost data for June are as follows:
Production Materials Labor Overhead
Beg. WIP P 720,000 P291,200 P169,600
Costs Added during June 5,760,000 2,660,800 1,306,400

P6,480,000 900,000 P7.20

 Illustration: In June, Rodayo Manufacturing had the
following : On June 1, it had 100,000 work in process which
are 40% complete. During June, 800,000 units were placed
into production and Rodayo transferred out 700,000 units. As
of June 30, 200,000 units that were 60% complete as to
conversion costs and 100% complete as to materials were in
Compute ending work in process.
Unit Cost data for June are as follows:
Production Materials Labor Overhead
Beg. WIP P 720,000 P291,200 P169,600
Costs Added during June 5,760,000 2,660,800 1,306,400

P4,428,000 820,000 P5.40

 Compute P6,480,000 900,000 P7.20
Unit
Production
Costs P4,428,000 820,000 P5.40

P12.60
 Costs to be accounted for
Work in process, June 1 P 1,180,800
Started into production 9,727,200
Total costs P 10,908,000
Prepare Cost
Reconciliation Costs to be accounted for
Transferred Out: (P7.2*700k units) P 8,820,000
Schedule
WIP, June 30
Materials (P7.2*200k units) 1,440,000
Conversion Cost (P5.4*120k units) 648,000
Total costs P 10,908,000
 • Problem 10-4 and 11-5
pages 442-443
Let’s Do It!

• MCQ 32-38 page 433-435

 • MCQ 4-13 pp 419-423
Offline
Activity
OPEN FORUM
Thank you and have a nice
day!

See you next meeting.