ACC 122: Cost Accounting and Control

Student Activity Sheet Module # 15

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

Lesson title: Treatment of Transferred-In Goods in a Process Materials:

Costing System, and Operational Costing System Textbook, SAS, & calculator
Lesson Objectives: References:
At the end of this module, I should be able to Hansen & Mowen; Cost Accounting &
1. Prepare a departmental production report with transferred-in Control; 2019 Edition
Vanderbeck, Edward J.; Principles of
goods and changes in output measures
Cost Accounting; 15th edition
2. Describe the basic features of operation costing Lanen, Anderson & Maher;
Fundamentals of Cost Accounting; 5th
edition

Productivity Tip:
After finishing this module, write some tips on what helped you learn on your Learning Tracker in
Thinking About Learning.

A. LESSON PREVIEW/REVIEW

1) Activity 1 : Introduction/Review (10 mins)

How are you? You’re now in Module 15! How time flies fast when you’re learning so much, right? ☺
Before going to the main topic of this module, let just have a recall about average cost method. Answer the
given problem below:

Dani Siopao, Inc. incurred the following cost in the month of October:

Material P 55,000
Labor P 46,000
Factory Overhead P 23,000

There was no beginning inventory. Ending work in process was 10,000 units at 50 percent complete.
15,000 units were completed and transferred out.

Requirement: Prepare a cost of production summary for the month, assuming Dani uses the average cost
method of process costing. Use the back part of this module for your answers.

Are you done? Check your answer by referring to the Key to Correction at the end of this module.

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This document is the property of PHINMA EDUCATION.
 ACC 122: Cost Accounting and Control
Student Activity Sheet Module # 15

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

2) Activity 2 (LO1 & LO2): What I Know Chart, part 1 (10 mins)

Alright! Let’s see what you already know, answer the first column (What I know). Leave the third
column (What I Learned) blank at this time.

What I Know Questions What I Learned (Activity 5)

1. What is the treatment of
transferred-in goods in a process
costing system?

2. What is an operational costing

system?

B. MAIN LESSON
1) Activity 3 (LO1 and LO2): Content Notes (45 mins)

Make sure to highlight or underline the important parts! Refer to chapter 6 of your book for a more
detailed discussion found on pages 284-290.

LO1: Prepare a departmental production report with transferred-in goods and changes in output
measures

Treatment of Transferred-In Goods

• Cost of this material is the cost of the goods transferred out computed in the prior
department
• Units started in the subsequent department correspond to the units transferred out from the
prior department
• Units of the transferring department may be measured differently than the units of the
receiving department
o Goods transferred in must be converted to the units of measure used by the second
department

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This document is the property of PHINMA EDUCATION.
 ACC 122: Cost Accounting and Control
Student Activity Sheet Module # 15

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

Production and Cost Data: Encapsulating Department

Bienestar Company, Wichita Plant Encapsulating Department Production and Cost Data for
May Production:

Units in process, May 1, 80% completeª 24,000 (capsules)

Units completed and transferred out 375,000
Units in process, May 31, 30% completeª 45,000

Costs:

Work in process, May 1:

Transferred-in costs $ 1,200
Direct materials (gelatin capsules) 450
Conversion costs 270
Total work in process $ 1,920

Step 1: Physical Flow Schedule

Dependence of the Encapsulating Department on the Blending Department must be considered:

Units to account for:

Units, beginning work in process 24,000
Units transferred in during May 396,000*
Total units to account for 420,000
Units accounted for:
Units completed and transferred out:
Started and completed 351,000
From beginning work in process 24,000 375,000
Units, ending work in process 45,000
Total units accounted for 420,000

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This document is the property of PHINMA EDUCATION.
 ACC 122: Cost Accounting and Control
Student Activity Sheet Module # 15

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

Step 2: Calculation of Equivalent Units

Equivalent Units of Production: Weighted Average Method

Transferred-In Direct Materials Conversion

Materials Added Costs
Units completed 375,000 375,000 375,000
Add: Units in ending work in
process × Percentage
complete:
45,000 × 100% 45,000
45,000 × 100% 45,000
45,000 × 30% 13,500
Equivalent units of output 420,000 420,000 388,500

Step 3: Computation of Unit Costs

• Unit cost is computed by calculating the unit cost for each input category

Unit transferred- in cost =

( $1,200 + $19,800 ) = $0.05
420,000

Unit direct materials cost =

( $450 + $3,750 ) = $0.01
420,000

Unit conversion costs =

( $270 + $7,500 ) = $0.02
388,500
Total unit cost = $0.05 + $0.01 + $0.02 = $0.08

Step 4: Valuation of Inventories

Cost of goods transferred out = $0.08 × 375,000 = $30,000

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 ACC 122: Cost Accounting and Control
Student Activity Sheet Module # 15

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

Transferred-in materials: $0.05 × 45,000 $2,250

Direct materials added: $0.01 × 45,000 450

Conversion costs: $0.02 × 13,500 270

Total $2,970

PRODUCTION REPORT: Encapsulating Department

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 ACC 122: Cost Accounting and Control
Student Activity Sheet Module # 15

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

COST INFORMATION

LO2: Describe the basic features of operation costing

Operation Costing

• Blend of job-order and process-costing procedures applied to batches of homogeneous

products

o Uses job-order procedures to assign direct materials costs to batches

o Uses process procedures to assign conversion costs

• Work orders are used to collect production costs for each batch and initiate production

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 ACC 122: Cost Accounting and Control
Student Activity Sheet Module # 15

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

Panel A:Physical Flows

Panel B: Cost flows (Shown by letter in Panel A and in dollars below)

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This document is the property of PHINMA EDUCATION.
 ACC 122: Cost Accounting and Control
Student Activity Sheet Module # 15

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

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This document is the property of PHINMA EDUCATION.
 ACC 122: Cost Accounting and Control
Student Activity Sheet Module # 15

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

2) Activity 4: Skill-building Activities (60 mins) SCORE: ________________

Let’s try to practice what you have learned! Check your answers against the Key to Corrections
found at the end of this SAS. Write your score on the space provided.

Part I (LO1)
Answer Exercises 6.22, 6.23, and Problem 6.35 in chapter 6 found on pages 305, 306, & 309,
respectively, of your textbook.

PART II (LO2)
Answer Exercise 6.25 in chapter 6 found on page 306 of your textbook.

3) Activity 5: What I Know Chart, part 2 (5 mins)

It’s time to answer the questions in the “What I Know Chart” in Activity 2. Write your answers in
the “What I Learned” column. Let’s see your improvement!

4) Activity 6: Check for Understanding (60 mins)

To better test your knowledge on the topic, answer individually the following activities below. To
check if you got it right, your teacher will provide you with the key answers. Be honest in checking your
answers. ☺

Part I (LO1)
Answer Problems 6.36 & 6.37 in chapter 6 found on page 310 of your textbook.

PART II (LO2)
Answer Problems 6.40 in chapter 6 found on pages 311-312 of your textbook.

C. LESSON WRAP-UP

1) Activity 7: Thinking about Learning (10 mins)

1. Work Tracker
You are done with this session! Let’s track your progress. Shade the session number you just
completed.

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This document is the property of PHINMA EDUCATION.
 ACC 122: Cost Accounting and Control
Student Activity Sheet Module # 15

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

2. Think about your Learning

From a rating of 1-10, determine if you have learned all the learning objectives. What is the reason of
your rating?
__________________________________________________________________________________
__________________________________________________________________________________

What part of the module gave you a hard time to comprehend?

__________________________________________________________________________________
__________________________________________________________________________________

Any other questions or concerns you want to raise?

__________________________________________________________________________________
__________________________________________________________________________________

2) Assignment
To better enhance your knowledge regarding the topic, answer the given exercise below. Your teacher
will provide you with the key answers.

Part I (LO1)
Answer Problems 6.38 & 6.39 in chapter 6 found on pages 310-311 of your textbook.

PART II (LO2)
Answer Problem 6.41 in chapter 6 found on pages 312-313 of your textbook.

FAQs
1. How are transferred-in costs treated in the calculation of equivalent units?
Transferred-in costs are treated as a separate input category when equivalent units are computed. The
category is viewed as a material that is always added at the beginning of the process.

2. When is operation costing used?

Operation costing is a blend of job-order and process-costing procedures. It is used where batches of
homogeneous products are produced.

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