1. Mitch Corporation's production cycle begins in the Boiling Department.

The following information is available for

August:
Units
Work in process, August 1 (50% complete)..................................................................
40,000
Started in August.................................................................................................
240,000
Work in process, August 30 (60% complete).................................................................
25,000
Materials are added at the beginning of the process in the Boiling Department. Using the average cost method,
what are the equivalent units of production for the month of August?

A.
B.
C.
D.
E.

Materials
255,000
270,000
280,000
305,000
240,000

Conversion
255,000
280,000
270,000
275,000
250,000

SUPPORTING CALCULATION:
Materials = 40,000 + 240,000 = 280,000
Conversion = (280,000 - 25,000) + .6(25,000) = 270,000

2. Moi Company has the following information for July:

Units started
Beginning Work in Process: (35% complete)
Normal spoilage (discrete)
Abnormal spoilage
Ending Work in Process: (70% complete)
Transferred out
Beginning Work in Process Costs:
Material
Conversion

100,000
20,000
3,500
5,000
14,500
97,000

units
units
units
units
units
units

P15,000
10,000

All materials are added at the start of the production process. Moi Company inspects goods at 75 percent
completion as to conversion.
What are equivalent units of production for material, assuming FIFO?
a. 100,000
b. 96,500
c. 95,000
d. 120,000
e. 120,500
SUPPOTING CALCULATION:
Materials: FIFO
Beginning Work in Process
+ Units Started and Completed
+ Normal Spoilage--Discrete
+ Abnormal Spoilage
+ Ending Work in Process
Equivalent Units of Production

3. Elen Co.

77,000
3,500
5,000
14,500

0%
100%
100%
100%
100%

77,000
3,500
5,000
14,500
100,000

Beginning inventory (30% complete as to Material B and 60%

complete for conversion)
Started this cycle
Ending inventory (50% complete as to Material B and 80%
complete for conversion)

700

units

2,000
500

units
units

Beginning inventory costs:

Material A
Material B
Conversion

P14,270
5,950
5,640

Current Period costs:

Material A
Material B
Conversion

P40,000
70,000
98,100

Material A is added at the start of production, while Material B is added uniformly throughout the process.
Assuming a FIFO method of process costing, compute EUP units for Materials A and B.
a. 2,700 and 2,280, respectively
b. 2,700 and 2,450, respectively
c. 2,000 and 2,240, respectively
d. 2,450 and 2,880, respectively
SUPPORTING CALCULATION:
FIFO
Beginning Work in Process
Units Started and Completed
Ending Work in Process
EUP Materials

Material A
0
1500
500
2000

Material B
490
1500
250
2240

4. When added materials in subsequent departments result in an increase of the units produced, the unit transferred-in
costs will:
A. be reclassified as new materials
B. be increased to provide for the additional units
C. be accounted for under the FIFO costing method
D. be decreased as they are spread over more units
E. remain unchanged

5. A characteristic of a process costing system is that:

A. costs are accumulated by order
B. it is used by a company manufacturing custom machinery
C. standard costs are not applicable
D. it requires a lot more detailed accounting than does a job order system
E. work in process inventory is restated in terms of completed units