COST ACCOUNTING: PROCESS COSTING

EXERCISE PROBLEMS
1. MDew Company, a manufacturing company, uses process costing under the FIFO method for
its products. The products underwent two departments namely Assembly and Finishing. The
following data were extracted from the system in the Finishing Department: Beginning inventory
units 10,000 which were 70% incomplete; Ending inventory units 5,000 which were 35%
converted, transferred-out units from the Assembly department 80,000 and spoiled units of
2,800 of which 2,500 were considered normal. In the Finishing Department, materials were
added at the end of the process.

The following were the costs in the Finishing Department: Beginning inventory costs of
Transferred-in, Direct Materials, and Conversion costs respectively were P150,000, P80,000,
and P76,000. Current costs of Direct Materials and Conversion were P742,500 and P650,000
respectively. Transferred-out cost from the Assembly department amounted to P1,162,500.

What are the equivalent units of production as to direct materials?

a. 85,000
b. 82,200
c. 80,300
d. 82,500

2. Using the same info as in number 1: What is the cost of completed goods?
a. P2,630,400
b. P2,762,400
c. P2,672,400
d. P2,720,000

3. Using the same info as in number 1: What is the cost of ending inventory?
a. P89,000
b. P134,000
c. P59,000
d. P120,000

4. Using the same info as in number 1: What is the period cost?

a. P5,100
b. P9,600
c. P7,200
d. P6,900

5. Eastern Products, Inc. input all materials at the start of operations in Process 1. The inventory in
process at the beginning of January consisted of 4,000 units with a total cost of materials of
P100,000 and labor and overhead of P20,000. In January, 20,000 units were started in process
with material cost of P500,000. Labor and overhead in January cost P280,000. As of end of
January, the inventory was 100% complete in materials but only 60% in labor and overhead.
The ending inventory consisted of 10,000 units. The equivalent units of labor and overhead for
the month of January amounted to:
 a. 20,000
b. 10,000
c. 26,000
d. 30,000

6. Yakal Company computed the flow of physical units completed for Department M for the month
of March 2013 as follows:

Units completed:
From work-in-process on March 1 15,000
From March production 45,000

Materials are added at the beginning of the process. The 12,000 units of work-in-process at
March 31, 2013, were 80% complete as to conversion costs. The work-in-process at March 1,
2013 was 80% complete as to conversion costs. Using the FIFO method, the equivalent units
for March conversion costs were:
a. 55,200
b. 57,600
c. 60,600
d. 63,600

7. Matabakaba Company sells food processors and manufactures them in a single continuous
process. At the end of August there were 200 units valued at P30,095, which consists of
P25,200 in materials cost and P4,895 in conversion cost. These were 100% complete as to
materials and 25% complete as to conversion costs. 1,200 units were added to production
during September, and these had material costs of P168,000. Processors which have not been
completed at the end of September total 200 units and were 100% complete as to materials and
50% complete as to conversion cost. Conversion cost during September were P158,125. There
were no units lost in process.

What are the equivalent units of production for September?

Materials Conversion Cost
a. 1,400 1,350
b. 1,200 1,100
c. 1,200 1,150
d. 1,200 1,250

8. The Wiring Department is the second stage of Acacia Company’s production cycle. On May 1,
the beginning work-in-process contained 25,000 units which were 60% complete as to
conversion costs. During May, 100,000 units were transferred-in from the first stage of Acacia’s
production cycle. On May 31, the ending work-in-process contained 20,000 units which were
80% complete as to conversion costs. Material costs are added at the end of the process, using
the weighted-average method, the equivalent units were:
Materials Conversion Costs
a. 125,000 100,000
b. 105,000 105,000
c. 105,000 121,000
 d. 125,000 121,000

9. On April 1, 2013, the Hari Company had 6,000 units of work-in-process in Department B, the
second and last stage of their production cycle. The costs attached to these 6,000 units were
P12,000 of costs transferred in from Department A, P2,500 of material cost added in
Department B and P2,000 of conversion cost added in Department B. Materials are added in
the beginning of the process in Department B. Conversion was 50% complete on April 1, 2013.
During April, 14,000 units were transferred in from Department A at a cost of P27,000; and
materials costs of P3,500 and conversion costs of P3,000 were added in Department B. On
April 30, 2013, Department B had 5,000 units of work-in-process 60% complete as to
conversion costs. The costs attached to these 5,000 units were P10,500 of costs transferred in
from Department A, P1,800 of material costs added in Department B and P800 of conversion
costs added in Department B.

Using the weighted-average method, what are the unit costs?

Transferred in Materials Conversion costs
a. P1.95 P0.25 P0.27
b. P1.95 P0.30 P0.28
c. P1.80 P0.30 P0.27
d. P1.70 P0.25 P0.28

10. Adonis Manufacturing Company makes a single product in two departments. The production
data for Department 2 for May 2013 follows:

Quantities:
In process, May 1 (40% completed) 4,000 units
Received from Dept. 1 30,000 units
Completed and transferred 25,000 units
In process, May 31 (60% completed) 6,000 units

Production costs: May 1 May 31

Received from Dept. 1 P16,300 P89,100
Materials P 3,800 P67,500
Conversion cost P 1,940 P81,000

Materials are added at the start of the process, and losses normally occur during the early stage
of the operation.

Using the Average Costing Method, what is the cost of the ending work in process inventory?
a. P44,640
b. P45,460
c. P45,600
d. P46,000