Prepared by: Brian Christian S.

Villaluz, CPA

ADVANCED FINANCIAL ACCOUNTING & REPORTING

Process Costing

Part I: Computation of Equivalent Units of Production (EUP) without spoilage

Problem 1:
Double Click Manufacturing Co. uses process costing in the manufacture of its sole product.
The following production data are presented to you:

Beginning inventory (40% 10,000 units

converted)
Started in process 75,000 units
Ending inventory (60% converted) 20,000 units

All materials are added at the start of processing.

1. Using average costing, compute for the EUP for materials and conversion.
2. Using FIFO, compute for the EUP for materials and conversion.

Problem 2:
Double Click Manufacturing Co. uses process costing in the manufacture of its sole product.
The following production data are presented to you:

Beginning inventory (40% to 10,000 units

complete)
Started in process 75,000 units
Ending inventory (60% to complete) 20,000 units

All materials are added at the end of processing.

1. Using average costing, compute for the EUP for materials and conversion.
2. Using FIFO, compute for the EUP for materials and conversion.

Problem 3:
Double Click Manufacturing Co. uses process costing in the manufacture of its sole product.
The following production data are presented to you:

Transferred out 120,000 units

Started in process 150,000 units
Ending inventory (7/8 45,000 units
converted)

Forty percent of materials is added when the processing is halfway completed; balance when
80% completed. Beginning inventory, if any, need 3/5 to be completed.

1. Using average costing, compute for the EUP for materials and conversion.
2. Using FIFO, compute for the EUP for materials and conversion.

Problem 4:
Double Click Manufacturing Co. uses process costing in the manufacture of its sole product.
The following production data are presented to you:

Beginning inventory (¾ to complete) 8,000 units

Transferred out 40,000 units
Units started 60,000 units

1
 Prepared by: Brian Christian S. Villaluz, CPA

Ending inventory (6/7 completed) ???

20% of materials is added when the units are 25% completed; remaining materials are
added when the units are 90% converted.

1. Using average costing, compute for the EUP for materials and conversion.
2. Using FIFO, compute for the EUP for materials and conversion.

Problem 5:
Monique Textile Inc., produces sophisticated fabrics that are being supplied to 5-star hotels
and to high-end condominiums that require components to be integrated in various points of
the production. At the beginning of the month, 4,000 units were in process. These were 20%
converted.

For the current month, Monique started to produce 16,000 units. Only 12,000 of these were
completed. The remainder was behind 25% from completion.

Due to the complexity of this textile, materials are added at various points in the production.
To sum up:

Direct materials:
40% are put into production at the beginning
50% are placed when the fabrics are 55% completed
10% are placed when the fabrics are 99% done

1. Using average costing, compute for the EUP for materials and conversion.
2. Using FIFO, compute for the EUP for materials and conversion.

Part II: Computation of Equivalent Units of Production (EUP) with spoilage

Problem 6:
Cherry Manufacturing Co. uses process costing in the manufacture of its sole product. The
following production data are presented to you:

Units started 100,000 units

WIP, beg. (35% complete) 20,000 units
Normal spoilage 3,500 units
Abnormal spoilage 5,000 units
WIP, end (30% incomplete) 14,500 units

All materials are added at the start of the process. Cherry inspects goods at 75% completion
as to conversion.

1. Using average costing, compute for the EUP for materials and conversion.
2. Using FIFO, compute for the EUP for materials and conversion.

Problem 7:
The following information is available for BGC Company for the current period:

Beginning WIP (75% 14,500 units

complete)
Started in process 75,000 units
Ending WIP (60% 16,000 units
complete)
Normal spoilage 5,000 units
Abnormal spoilage 2,500 units

2
 Prepared by: Brian Christian S. Villaluz, CPA

All materials are added at the start of production.

1. Using average costing, compute for the EUP for materials and conversion.
2. Using FIFO, compute for the EUP for materials and conversion.

Part III: Cost of production report (with spoilage)

Problem 8:
Cherry Manufacturing Co. uses process costing in the manufacture of its sole product. The
following information is available for the current year:

Units started 100,000 units

WIP, beg. (35% complete) 20,000 units
Normal spoilage 3,500 units
Abnormal spoilage 5,000 units
WIP, end (30% incomplete) 14,500 units

Cost of beginning
WIP
Material P90,000
Conversion 210,000

Current cost
Material 690,000
Conversion 471,150

All materials are added at the start of the process. Cherry inspects goods at 75% completion
as to conversion.

Using FIFO…
1. Compute for the EUP for materials and conversion.
2. Compute for the cost per EUP for materials and conversion.
3. Compute for the cost assigned to units completed.
4. Compute for the cost assigned to the ending inventory.
5. Compute for the cost of abnormal lost units.

Using average costing…

6. Compute for the EUP for materials and conversion.
7. Compute for the cost per EUP for materials and conversion.
8. Compute for the cost assigned to units completed.
9. Compute for the cost assigned to the ending inventory.
10.Compute for the cost of abnormal lost units.

Problem 9:
Cherry Manufacturing Co. uses process costing in the manufacture of its sole product. The
following information is available for the current year:

Units started 100,000 units

WIP, beg. (35% complete) 20,000 units
Normal spoilage 3,500 units
Abnormal spoilage 5,000 units
WIP, end (20% incomplete) 14,500 units

Cost of beginning

3
 Prepared by: Brian Christian S. Villaluz, CPA

WIP
Material P90,000
Conversion 210,000

Current cost
Material 690,000
Conversion 471,150

All materials are added at the start of the process. Cherry inspects goods at 75% completion
as to conversion.

Using FIFO…
1. Compute for the EUP for materials and conversion.
2. Compute for the cost per EUP for materials and conversion.
3. Compute for the cost assigned to units completed.
4. Compute for the cost assigned to the ending inventory.

Using average costing…

5. Compute for the EUP for materials and conversion.
6. Compute for the cost per EUP for materials and conversion.
7. Compute for the cost assigned to units completed.
8. Compute for the cost assigned to the ending inventory.

Problem 10:
Cherry Manufacturing Co. uses process costing in the manufacture of its sole product. The
following information is available for the current year:

Units started 100,000 units

WIP, beg. (80% complete) 20,000 units
Normal spoilage 3,500 units
Abnormal spoilage 5,000 units
WIP, end (20% incomplete) 14,500 units

Cost of beginning WIP

Material P90,00
0
Conversion 210,00
0

Current cost
Material 690,00
0
Conversion 471,15
0

All materials are added at the start of the process. Cherry inspects goods at 75% completion
as to conversion.

Using FIFO…
1. Compute for the EUP for materials and conversion.
2. Compute for the cost per EUP for materials and conversion.
3. Compute for the cost assigned to units completed.
4. Compute for the cost assigned to the ending inventory.

Using average costing…

4
 Prepared by: Brian Christian S. Villaluz, CPA

5. Compute for the EUP for materials and conversion.

6. Compute for the cost per EUP for materials and conversion.
7. Compute for the cost assigned to units completed.
8. Compute for the cost assigned to the ending inventory.

Part IV: Comprehensive problem (without spoilage)

A company employs FIFO process costing system concerning its only product which
undergoes production in assembly department and finishing department. The following data
for the year ended December 31, 2016 are provided:

ASSEMBLY DEPARTMENT
Units: Cost:
January 1, 2016 100,000 units – 40% complete as to Direct materials –
conversion P3,000,000
Direct labor – P5,000,000
Factory overhead –
P2,000,000
December 31, 2016 150,000 units – 80% complete as to ???
conversion
Units started during 400,000 units Direct materials –
2016 P12,000,000
Direct labor – P15,000,000
Factory overhead –
P13,000,000

FINISHING DEPARTMENT
Units: Cost:
January 1, 2016 50,000 units – 70% incomplete as to Transferred In – P10,000,000
conversion Direct materials –
P6,000,000
Direct labor – P1,000,000
Factory overhead –
P3,000,000
December 31, 2016 30,000 units – 10% incomplete as to ???
conversion
Units started during ??? Transferred In – ???
2016 Direct materials –
P30,000,000
Direct labor – P40,000,000
Factory overhead –
P10,000,000

Additional information:
(a) It is the company’s policy to add conversion cost evenly throughout the period in the
two departments.
(b) It is the company’s policy to add all direct materials in the assembly department at
the start of the process while all direct materials in the finishing department are
added at the end of the process.
(c) There is no spoilage in both departments.

In theassembly department…
1.What is the EUP for materials and conversion?
2.How much is the cost per EUP for materials and conversion?
3.What is the cost of goods manufactured or cost assigned to units
completed for the year ended December 31, 2016?
4. What is the cost assigned to December 31, 2016 work-in-process inventory?

5
 Prepared by: Brian Christian S. Villaluz, CPA

In thefinishing department…
5.What is the EUP for transferred in, materials, and conversion?
6.How much is the cost per EUP for transferred in, materials, and conversion?
7.What is the cost of goods manufactured or cost assigned to units
completed for the year ended December 31, 2016?
8. What is the cost assigned to December 31, 2016 work-in-process inventory?

Part V: Comprehensive problem (with spoilage)

Exciting Company applies process costing in the manufacture of its sole product.
Manufacturing starts in Department 1 where materials are all added at the start of
processing. The good units are then transferred to Department 2 where all the incremental
materials needed for its completion are added after final inspection. In both departments,
units are inspected at the end of processing. Department 1 uses FIFO while Department 2
uses average costing. The following production data for August show:

Department Department
1 2
QUANTITY SCHEDULE
Beg. WIP 6,000 4,000
Stage of completion 1/3 4/5
Ending WIP 9,000 7,000
Stage of completion 2/3 5/7
Put into process 44,000 -
Normal loss 1,200 1,000
Abnormal loss 800 500

COST DATA
Beg. WIP
Transferred in - P3,710
Materials P9,000 -
Conversion costs 6,500 4,000
Current period costs
Materials 88,000 62,100
Conversion costs 67,500 49,300
Transferred in - ???

DEPARTMENT 1
1. What is the EUP for materials and conversion?
2. How much is the cost per EUP for materials and conversion?
3. What is the cost of goods manufactured or cost assigned to units
completed for the year ended December 31, 2016?
4. What is the cost assigned to December 31, 2016 work-in-process inventory?

DEPARTMENT 2
5. What is the EUP for transferred in, materials, and conversion?
6. How much is the cost per EUP for materials and conversion?
7. What is the cost of goods manufactured or cost assigned to units
completed for the year ended December 31, 2016?
8. What is the cost assigned to December 31, 2016 work-in-process inventory?

END 

-BCSV-

6
 Prepared by: Brian Christian S. Villaluz, CPA

ANSWERS:
PROBLEM 1: PROBLEM 7:
1. DM – 85,000; CC – 77,000 1. DM – 84,500; CC – 78,100
2. DM – 75,000; CC – 73,000 2. DM – 70,000; CC – 67,225

PROBLEM 2: PROBLEM 8:
1. DM – 65,000; CC – 73,000 1. DM – 100,000; CC – 106,525
2. DM – 65,000; CC – 67,000 2. 6.90; 4.42
3. 1,264,853
4. 144,913
5. 51,075
6. DM – 120,000; CC – 113,525
7. 6.50; 6.00
8. 1,251,000
9. 155,150
10. 55,000

PROBLEM 3: PROBLEM 9:
1. DM – 165,000; CC – 159,375 1. DM – 100,000; CC – 107,975
2. DM – 165,000; CC – 153,375 2. 6.90; 4.36
3. 1,254,161
4. 155,760
5. DM – 120,000; CC – 114,975
6. 6.50; 5.92
7. 1,238,412
8. 167,540

PROBLEM 4: PROBLEM 10:

1. DM – 45,600; CC – 64,000 1. DM – 100,000; CC – 98,975
2. DM – 44,000; CC – 62,000 2. 6.90; 4.76
3. 1,248,042
4. 160,729
5. DM – 120,000; CC – 114,975
6. 6.50; 5.92
7. 1,238,412
8. 167,540

PROBLEM 5: Part IV
1. DM – 19,600; CC – 19,000 1. DM - 400,000; CC - 430,000
2. DM – 18,000; CC – 18,200 2. 30; 65.12
3. 37,687,200
4. 12,314,400
5. TI – 350,000; DM – 370,000; CC –
382,000
6. 107.68; 81.08; 130.89
7. 130,923,150
8. 6,764,430

7
 Prepared by: Brian Christian S. Villaluz, CPA

PROBLEM 6: Part V
1. DM – 120,000; CC – 113,525 1. DM – 44,000; CC – 45,000
2. DM – 100,000; CC – 106,525 2. 2.00; 1.50
3. 141,200
4. 27,000
5. 43,000; 34,500; 41,000
6. 3.37; 1.80; 1.30
7. 227,885
8. 30,090