Process Costing Problems and Exercises
Process Costing Problems and Exercises
The Mexico Company manufactures a single product that goes through two
departments. The data relating to activity performed in first department
during the month of June is given below:
Exercise 1 (b):
The following data has been collected from three different situations. Units
transferred out are 100% complete with respect to all cost elements. Stages
of completion of beginning and ending inventories are applicable to all cost
elements.
Exercise 2:
Required:
The Fedex Company produces a car care product known as Shine-9 which is
a high quality vehicle cleaning liquid. The processing of Shine-9 is completed
through three separate departments. The following data pertains to the
company’s first processing department:
The information about the cost in work in process beginning inventory and
the total cost added during the month of May is given below:
Materials: P192,500
Conversion cost: P107,250
Required:
Note: In this exercise, we have used the data of Fedex Company from
exercise 5. If you have directly come to this exercise, we recommend you try
to solve exercise 5 first and then come back to this exercise to continue.
The Fedex Company uses a weighted average method to account for units
and costs. The following information belongs to the company’s first
processing department.
The cost per equivalent for the month of May for first department has been
computed below:
Required: Using above data, complete the following cost reconciliation of
the first processing department of Fedex Company:
The quantity schedule and the number of equivalent units determined using
weighted average method for July for the first department are given below:
Required:
Note: In this exercise, we have used the data of Hotex Company from
exercise 7. If you have directly come to this exercise, we recommend you try
to solve exercise 7 first and then come back to this exercise to continue.
The Hotex Company presents you the following information for July for the
first processing department:
*Work done in July: 25% (= 100% – 75%) with respect to materials and 60%
(= 100% – 40%) with respect to conversion.
Cost per equivalent unit – FIFO method – (taken from exercise 7):
Required: Using above data, complete the following cost reconciliation for
July for the first processing department of Hotex Company.
Exercise 9: Process costing journal entries
The Veeta Baking Company has a single product known as Veeta Bread. The
company uses a process costing system. The Veeta Bread is processed
through two departments – mixing department and baking department.
The flow of cost through mixing and baking departments for the month of
July has been shown by the following work in process T-accounts:
Required: Using the information given in above T-accounts, make journal
entries to show the flow of cost through mixing and baking departments for
the month of July.
Exercise 10 (a):
The Meezan Company has three processing departments. The costs incurred
in the second department during May were as follows:
24,000 units were received from first department during May. 14,000 units
were completed and transferred to finished goods store room and 10,000
units were still in process at the end of May. The units in work in process
ending inventory were 50% complete with respect to materials and 25%
complete with respect to labor and manufacturing overhead cost.
Required: Using above data, prepare a cost of production report for May for
the second department of Meezan Company.
Exercise 10 (b):
The Xcell Health Care Company uses process costing system. The costs
incurred in department 2 during the month of March are given below:
The Sunshine Company uses process costing system. During May, 5,250
units were put into process in first department. 3,500 units were transferred
to next department, 250 units were lost in process and 1,500 units were in
process at the end of the month.
For the month of May, the materials cost was P105,000, labor cost was
P79,540 and manufacturing overhead cost was P63,050.
The materials were added at the start of production process in first
department. All units in ending inventory were 90% complete as to labor and
manufacturing overhead costs. Any spoilage occurred during the month was
considered a normal loss.
Required: Prepare a cost of production report for May for the first
department of Sunshine Company.
The Horizon Inc. has three processing departments and uses a process
costing system. For November, the cost and production data related to
department 2 is given below:
Materials: P83,300
Labor: P203,400
Factory overhead: P113,000
Required: Using the data given above, prepare a cost of production report
of department B of Kim corporation.
Exercise 13: Cost of production report – normal loss at the end of process
The Sky Corporation uses a process costing system in its two production
departments – department X and department Y. During October, department
Y received 5,000 units from department X at a cost of P100,000. The
materials and conversion costs incurred in department Y during the month of
October were as follows:
Materials: P16,000
Conversion costs: P72,000