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%
converted)
Started in process
Ending inventory (60% converted)

10,000 units
75,000 units
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
complete)
Started in process
Ending inventory (60% to complete)

10,000 units
75,000 units
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
Started in process
Ending
inventory
converted)

(7/8

120,000 units
150,000 units
45,000 units

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 ( to complete)
Transferred out
Units started

8,000 units
40,000 units
60,000 units

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
WIP, beg. (35% complete)
Normal spoilage
Abnormal spoilage
WIP, end (30% incomplete)

100,000 units
20,000 units
3,500 units
5,000 units
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
complete)
Started in process
Ending
WIP
complete)
Normal spoilage
Abnormal spoilage

(75%

14,500 units

(60%

75,000 units
16,000 units
5,000 units
2,500 units

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
WIP, beg. (35% complete)
Normal spoilage
Abnormal spoilage
WIP, end (30% incomplete)

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

Cost
of
beginning
WIP
Material
Conversion

P90,000
210,000

Current cost
Material
Conversion

690,000
471,150

All materials are added at the start of the process. Cherry inspects goods at 75% completion
as to conversion.
Using
1.
2.
3.
4.
5.

FIFO
Compute
Compute
Compute
Compute
Compute

for
for
for
for
for

the
the
the
the
the

EUP for materials and conversion.

cost per EUP for materials and conversion.
cost assigned to units completed.
cost assigned to the ending inventory.
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
WIP, beg. (35% complete)
Normal spoilage
Abnormal spoilage
WIP, end (20% incomplete)
Cost

of

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

beginning

Prepared by: Brian Christian S. Villaluz, CPA

WIP
Material
Conversion

P90,000
210,000

Current cost
Material
Conversion

690,000
471,150

All materials are added at the start of the process. Cherry inspects goods at 75% completion
as to conversion.
Using
1.
2.
3.
4.

FIFO
Compute
Compute
Compute
Compute

Using
5.
6.
7.
8.

average costing
Compute for the EUP for materials and conversion.
Compute for the cost per EUP for materials and conversion.
Compute for the cost assigned to units completed.
Compute for the cost assigned to the ending inventory.

for
for
for
for

the
the
the
the

EUP for materials and conversion.

cost per EUP for materials and conversion.
cost assigned to units completed.
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
WIP, beg. (80% complete)
Normal spoilage
Abnormal spoilage
WIP, end (20% incomplete)
Cost of beginning WIP
Material

100,000 units
20,000 units
3,500 units
5,000 units
14,500 units
P90,00
0
210,00
0

Conversion
Current cost
Material

690,00
0
471,15
0

Conversion

All materials are added at the start of the process. Cherry inspects goods at 75% completion
as to conversion.
Using
1.
2.
3.
4.

FIFO
Compute
Compute
Compute
Compute

for
for
for
for

the
the
the
the

EUP for materials and conversion.

cost per EUP for materials and conversion.
cost assigned to units completed.
cost assigned to the ending inventory.

Using average costing

Prepared by: Brian Christian S. Villaluz, CPA

5.
6.
7.
8.

Compute
Compute
Compute
Compute

for
for
for
for

the
the
the
the

EUP for materials and conversion.

cost per EUP for materials and conversion.
cost assigned to units completed.
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
January 1, 2016

December 31, 2016

Units started during
2016

Units:
100,000 units 40% complete as to
conversion

150,000 units 80% complete as to

conversion
400,000 units

Cost:
Direct materials
P3,000,000
Direct labor P5,000,000
Factory overhead
P2,000,000
???
Direct materials
P12,000,000
Direct labor P15,000,000
Factory overhead
P13,000,000

FINISHING DEPARTMENT
January 1, 2016

December 31, 2016

Units started during
2016

Units:
50,000 units 70% incomplete as to
conversion

30,000 units 10% incomplete as to

conversion
???

Cost:
Transferred In P10,000,000
Direct materials
P6,000,000
Direct labor P1,000,000
Factory overhead
P3,000,000
???
Transferred In ???
Direct materials
P30,000,000
Direct labor P40,000,000
Factory overhead
P10,000,000

Additional information:
(a) It is the companys policy to add conversion cost evenly throughout the period in the
two departments.
(b) It is the companys 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 the
1.
2.
3.

assembly department
What is the EUP for materials and conversion?
How much is the cost per EUP for materials and conversion?
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?

Prepared by: Brian Christian S. Villaluz, CPA

In the
5.
6.
7.

finishing department
What is the EUP for transferred in, materials, and conversion?
How much is the cost per EUP for transferred in, materials, and conversion?
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:

QUANTITY SCHEDULE
Beg. WIP
Stage of completion
Ending WIP
Stage of completion
Put into process
Normal loss
Abnormal loss
COST DATA
Beg. WIP
Transferred in
Materials
Conversion costs
Current period costs
Materials
Conversion costs
Transferred in

Department
1

Department
2

6,000
1/3
9,000
2/3
44,000
1,200
800

4,000
4/5
7,000
5/7
1,000
500

P9,000
6,500

P3,710
4,000

88,000
67,500
-

62,100
49,300
???

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-

Prepared by: Brian Christian S. Villaluz, CPA

ANSWERS:
PROBLEM 1:
1. DM 85,000; CC 77,000
2. DM 75,000; CC 73,000

PROBLEM 7:
1. DM 84,500; CC 78,100
2. DM 70,000; CC 67,225

PROBLEM 2:
1. DM 65,000; CC 73,000
2. DM 65,000; CC 67,000

PROBLEM 8:
1. DM 100,000; CC 106,525
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:
1. DM 165,000; CC 159,375
2. DM 165,000; CC 153,375

PROBLEM 9:
1. DM 100,000; CC 107,975
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:
1. DM 45,600; CC 64,000
2. DM 44,000; CC 62,000

PROBLEM 10:
1. DM 100,000; CC 98,975
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:
1. DM 19,600; CC 19,000
2. DM 18,000; CC 18,200

Part IV
1.
2.
3.
4.
5.
6.
7.
8.

DM - 400,000; CC - 430,000
30; 65.12
37,687,200
12,314,400
TI 350,000; DM 370,000; CC
382,000
107.68; 81.08; 130.89
130,923,150
6,764,430

Prepared by: Brian Christian S. Villaluz, CPA

PROBLEM 6:
1. DM 120,000; CC 113,525
2. DM 100,000; CC 106,525

Part V
1.
2.
3.
4.
5.
6.
7.
8.

DM 44,000; CC 45,000
2.00; 1.50
141,200
27,000
43,000; 34,500; 41,000
3.37; 1.80; 1.30
227,885
30,090