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PROBLEM 1
Compute the equivalent units of production of conversion cost for each of the following
independent cases.

A. In process, end (5/8 incomplete) 42,400 units

In process, beg (1/3 to be completed) 29,250 units
(Units started in process is 175% of the work in process at the
end)

1. EUP using FIFO

Actual Units/PhysicalUnits/Whole Units

Units in Process, beg 29,250
Add: Units started in process 74,200 (42,400 x 175%)
Units to be accounted for 103,450

Units Trans-out to FG 61,050 Actual EUP FIFO EUP AVE

(beg) 29,250 9,750 29,250
(started) 31,800 31,800 31,800
Units in Process, end 42,400 15,900 15,900
As accounted 103,450 57,450 76,950

B. In process, beg (3/5 additional work to be done) 10,125 units

Finished and Transferred units 15,750 units
(Of the units started in process, ½ represent work in process
at the end which were 20% completed during the current
period )

2. EUP using Average.

10,125 + X = 15,750 + .50 X

.50X = 5,625

X = 11,250

Actual Units/PhysicalUnits/Whole Units

Units in Process, beg 10,125
Add: Units started in process 11,250
Units to be accounted for 21,375

Actual EUP AVE Actual EUP FIFO

Units Trans-out to FG 15,750 15,750 10,125 6,075
5,625 5,625
Units in Process, end 5,625 1,125 5,625 1,125

As accounted 21,375 16,875 21,375 12,825

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PROBLEM 2
The Cutting Department is the first stage of ABC Company’s production cycle.
Beginning WIP inventory for this department was 60% incomplete as to conversion
costs. Ending WIP was 25% complete. Information as to conversion costs in the
Cutting Department for September is presented as follows:
Units Conversion Cost
WIP at September 1 37,500 P 31,650
Units started and cost incurred
during September 202,500 296,100
Units completed and transferred to next
department during September 150,000

a. Using FIFO method, the total conversion cost of units transferred to finished
goods from the units in process beginning 73,950
b. Using the weighted average method, the conversion cost of WIP in the Cutting
Department at September 30 P42,750

AVERAGE

Units in Process, beg 37,500

Add: Units started in process 202,500
Units to be accounted for 240,000

Units Transferred out 150,000 150,000

Units in Process, end 90,000 22,500
Units as accounted 240,000 172,500

Unit Cost (AVE) 31,650 + 296,100 = 327,750/172,500 = P1.90

Cost of FG/Transferred out units

(150,000 x P1.90) P285,000

Cost of Units in Process, end

(22,500 x P1.90) P42,750

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FIFO

Units in Process, beg 37,500

Add: Units started in process 202,500
Units to be accounted for 240,000

Units Transferred out 150,000 CC

37,500 22,500
112,500 112,500
Units in Process, end 90,000 22,500
Units as accounted 240,000 157,500

Unit Cost (FIFO) = 296,100 / 157,500 = P1.88

Cost of FG/Transferred out units

Cost Last Month 15,000 units P31,650

Cost This Month (22,500 units x P1.88) 42,300—--------------
P73,950****
(112,500 units x P1.88) 211,500

Total Cost of FG P285,450 (150,000)

Cost of Units in Process, end (FIFO)

(22,500 x P1.88) P42,300

PROBLEM 3
IDOL Inc. adds materials at the beginning of the process in department USB.
Conversion costs were 70% complete as to the 9,500 work-in-process units on
September 1 and 40% incomplete as to the 7,000 work-in-process units on September
30. During September, 12,000 units were completed and transferred to the next
department. An analysis of the cost relating to work-in-process on September 1 and to
production activity for September is as follows: (2 decimal places)

Costs
Materials Conversion
Work-in-process, September 1 P10,000 P7,500
Costs incurred during September P42,750 P52,525

a. The total cost per equivalent unit for September under FIFO
b. The total cost per equivalent unit for September under average

Units in Process, beg 9,500

Add: Units Started in Process 9,500
Units to be accounted for 19,000

FIFO Method:
M CC
Units transferred out 12,000 12,000 12,000
Units in Process, end 7,000 7,000 4,200
Units as accounted 19,000 19,000 16,200 Average
(9,500) (6,650)
9,500 9,550 FIFO
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M CC
Units transferred out 12,000
9,500 0 2,850
2,500 2,500 2,500
Units in Process, end 7,000 7,000 4,200
Units as accounted 19,000

9,500 9,550 FIFO

Unit Cost of FIFO = Cost This Month / EUP

Materials = P42,750/9,500 = P4.50

Conversion = P52,525 / 9,550 = P5.50

Unit Cost of Materials = Cost Last Month + Cost This Month / EUP
10,000 + 42,750 = 52,750/19,000 = P2.78

Unit Cost Of Conversion = 7,500 + 52,525 = 60,025/16,200 = P3.71

Average Method:
M CC
Units transferred out 12,000 12,000 12,000
Units in Process, end 7,000 7,000 4,200
Units as accounted 19,000 19,000 16,200

Unit Cost of Materials = Cost Last Month + Cost This Month / EUP
10,000 + 42,750 = 52,750/19,000 = P2.78

Unit Cost Of Conversion = 7,500 + 52,525 = 60,025/16,200 = P3.71

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PROBLEM 4
The following information is available for DVC Corporation for the current month:

Started this month 120,000 Units

Beginning WIP (3/5 incomplete) 11,250 Units
Total spoilage 3,000 Units
Abnormal spoilage 1,350 Units
Ending WIP (30% to be done) ? Units
Transferred out 108,750 Units

Beginning Work in Process Costs:

Material P 15,600
Conversion 20,700

Current Costs:
Material P 180,000
Conversion
525,915

Units in Process, beg 11,250

Add: Units Started during the period 120,000
Units to be accounted for 131,250

Case A. (Original)
Discrete loss (with 100% inspection point and all materials are added at the start of the
process)

Actual EUP M EUP CC

Units transferred out 108,750
(beg) 11,250 0 6,750
(started) 97,500 97,500 97,500
Units in Process, end 19,500 19,500 13,650
Spoilage Normal 1,650 1,650 1,650
Abnormal 1,350 1,350 1,350
As accounted 131,250 120,000 120,900

Case B
Continuous (no inspection point and all materials are added at the start of the process)
Actual EUP M EUP CC
Units transferred out 108,750
(beg) 11,250 0 6,750
(started) 97,500 97,500 97,500
Units in Process, end 19,500 19,500 13,650
Spoilage Normal 1,650 0 0
Abnormal 1,350 1,350 1,350
As accounted 131,250 118,350 119,250

All materials are added at the start of production and the inspection point is at the end of
the process. Using the more accurate method representing the physical flow of units.

a. Total costs of units transferred-out

b. The amount of work in-process, end
c. Cost of abnormal loss units

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Case C
Discrete loss (with inspection point) 80% stage of production and all materials are
added at the start of the process.

Actual EUP M EUP CC

Units transferred out 108,750
(beg) 11,250 0 6,750
(started) 97,500 97,500 97,500
Units in Process, end 19,500 19,500 13,650
Spoilage Normal 1,650 1,650 1,320
Abnormal 1,350 1,350 1,080
As accounted 131,250 120,000 120,300

Case D
Discrete loss (with inspection point) 60% stage of production and all materials are
added at the end of the process.

Actual EUP M EUP CC

Units transferred out 108,750
(beg) 11,250 11,250 6,750
(started) 97,500 97,500 97,500
Units in Process, end 19,500 0 13,650
Spoilage Normal 1,650 0 990
Abnormal 1,350 0 810
As accounted 131,250 108,750 119,700

Case E
Discrete loss (with inspection point) 90% stage of production and 25% of materials are
added at the start of the process while the remaining 75% are added at the end of the
process.

Actual EUP M EUP CC

Units transferred out 108,750
(beg) 11,250 8,437.50 6,750
(started) 97,500 97,500 97,500
Units in Process, end 19,500 4,875 13,650
Spoilage Normal 1,650 412.5 1,485
Abnormal 1,350 337.5 1,215
As accounted 131,250 111,562.5 120,600

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PROBLEM 5
RMG Corporation has the following information for the current month:

Units started 175,000 units

Beginning Work in Process: (65% to be 35,000 units
done)
Total spoilage 14,875 units
Spoilage within tolerance level 6,125 units
Ending Work in Process: (20% 25,375 units
incomplete)
Transferred out 169,750 units

Beginning Work in Process Costs:

Material P46,250
Conversion 60,675

Current Costs:
Material P170,625
Conversion 265,335

P542,885

All materials are added at the start of the production process. RMG Corporation inspects
goods at 100 percent completion as to conversion. Using the method that does not
commingle the beginning and current period production activity

a. What are equivalent units of production for conversion cost? 192,675

b. Total costs of transferred out units 469,606.12
c. The amount of work in-process, end 52,695.76

35,000
+ 175,000
210,000 to be accounted for

Trans-out 169,750 M CC
(beg) 35,000 0 22,750
(this month) 134,750 134,750 134,750

Units in Process, end 25,375 25,375 20,300

Normal lost 6,125 6,125 6,125
Abnormal lost 8,750 8,750 8,750
210,000 175,000 192,675

Abnormal Lost units 8,750 x 2.3521 = P20,580.88

M = 170,625/175,000 = P.975
CC=265,335/192,675 = P1.3771

Cost of FG

Cost Last Month P 106,925

Cost This Month (22,750 x P1.3771) 31,329.03
(134,750 x P2.3521) 316,945.48

Add: Cost of Normal lost Units (6,125 x P2.3521) 14,406.61

P469,606.12

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Cost of Units in Process, end

M 25,375 x .975 = 24,740.63
CC 20,300 x P1.3771 = 27,955.13 P52,695.76

-End of Handout-

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