Use the following information for questions 1 - 12.

The following information is available for K Co. for June:

Started this month 80,000 units

Beginning WIP(40% complete) 7,500 units
Normal spoilage 1,100 units
Abnormal spoilage 900 units
Ending WIP(70% complete) 13,000 units
Transferred out 72,500 units

Beginning Work in Process Costs:

Material P10,400
Conversion 13,800
Current Costs:
Material P120,000
Conversion 350,000

All materials are added at the start of production and the inspection point is at the
end of the process.

1. What are equivalent units of production for material using FIFO? (79,100)
2. What are equivalent units of production for conversion costs using FIFO?
(80600)
3. What are equivalent units of production for material using weighted
average? (87500)
4. What are equivalent units of production for conversion costs using weighted
average? 83600
5. What is cost per equivalent unit for material using FIFO? P1.50
6. What is cost per equivalent unit for conversion costs using FIFO? P4.34
7. What is cost per equivalent unit for material using weighted average? P1.49
8. What is cost per equivalent unit for conversion costs using weighted
average? 4.35
9. What is the cost assigned to ending inventory using FIFO? 58994
10. What is the cost assigned to abnormal spoilage using FIFO? 5,256
11. What is the cost assigned to normal spoilage? 6424
12. What is the total cost assigned to goods transferred out using weighted
average? 429824

Use the following information for questions 12–18.

T Co. has the following information for July:

Units started 100,000 units

Beginning Work in Process: (35% complete) 20,000 units
Normal spoilage 3,500 units
Abnormal spoilage 5,000 units
Ending Work in Process: (70% complete) 14,500 units
Transferred out 97,000 units
Beginning Work in Process Costs:
Material P15,000
Conversion 10,000

All materials are added at the start of the production process. T Co. inspects goods at
75 percent completion as to conversion.

13. What are equivalent units of production for material, assuming FIFO?
100,000
14. What are equivalent units of production for conversion costs, assuming
FIFO? 106525
15. Assume that the costs per EUP for material and conversion are P1.00 and
P1.50, respectively. What is the amount of the period cost for July using
FIFO? 10625
 16. Assume that the costs per EUP for material and conversion are P1.00 and
P1.50, respectively. Using FIFO, what is the total cost assigned to the
transferred-out units (rounded to the nearest peso)? 244438
17. What are equivalent units of production for material assuming weighted
average is used?120,000
18. What are equivalent units of production for conversion costs assuming
weighted average is used? 113,525

use the following for questions 19 – 25

In Dept 1 material is added at the beginning, in Dept 2 material is added at the

end. Normal losses in Department 1 should not exceed 5 percent of the units
started; losses are found at an inspection point located 70 percent of the way
through the production process. The normal loss in Department 2 is 3 percent of
the units transferred in; losses are determined at an inspection point at the end
of the production process.

The following production and cost data are available for January 2001.

PRODUCTION RECORDS
(IN UNITS)

Dept. 1 Dept. 2
Beginning inventory 6,000 3,000
Started or transferred in 150,000 ?
Ending inventory 18,000 15,000
Spoiled units 9,000 6,000
Transferred out ? 111,000

COST RECORD

Beginning inventory
Preceding department n/a P6,690
Material P3,000 0
Conversion 2,334 504
Current period:
Preceding department n/a P230,910*
Material P36,000 740
Conversion 208,962 52,920

*This is not the amount derived from your calculations. Use this amount so that
you do not carry forward any possible cost errors from Department 1.

The beginning and ending inventory units in Department 1 are, respectively, 10

percent and 60 percent complete as to conversion. In Department 2, the beginning
and ending units are, respectively, 40 percent and 80 percent complete as to
conversion.

Assume spoilage in Department 1 is continuous and discrete in Department 2. Use

FIFO in Department 1 and weighted average in Department 2.

19. What is the cost of normal spoilage in department 1?

20. What is the cost of the abnormal spoilage in department 1?
21. What is the cost of the units transferred out to department 2?
22. What is the cost of the ending inventory in department 1?
23. What is the cost of the normal spoilage in department 2?
24. What is the cost of the units completed in department 2?
25. What is the cost of the ending inventory in department 2?
Chapter 7 Special Production Issues: Lost Units and Accretion 7–3

ANSWER:

Department 1
Department 2 .
Mat CC TI Mat CC
Complete 129,000 129,000 111,000 111,000 111,000
+ Equiv End 18,000 10,800 15,000 0 12,000
+ Abn Loss 1,500 1,050 2,130 2,130 2,130
148,500 140,850 + Norm Loss 3,870 3,870 3,870
– Equiv Beg (6,000 ) (600) EP 132,000 117,000 129,000
EP 142,500 140,250

Unit Cost Unit Cost

TI P6,690 + 230,910 = P1.80
132,000

Mat P36,000 = P0.25 Mat P740 = P0.01

142,500 117,000

CC P208,962 = P1.49 CC P504 + 52,920 = P0.41

140,250 129,000

End WIP 18,000 × P0.25 = P 4 500 End WIP 15,000 × P1.80 = P27,000
10,800 × P1.49 = 16,092 12,000 × P0.41 = 4,920
P20,592 P31,920

ABN Loss 1,500 × P0.25 = P 375 ABN Loss 2,130 × P2.22 = P4,729
1,050 × P1.49 = 1,565
P1,940

COGM (Department 1) COGM (Department 2)

P 250,296 – 20,592 – 1,940 = P 227,764 P291,764 – P31,920 – P4,729 =
P255,115

DIFFICULT