ACC108: COST ACCOUNTING AND CONTROL

PROCESS COSTING WITH SPOILAGE

PROBLEM 1
ABC Corp. manufactures milk products and has the following data for the month of December 2024:
WIP beg, 30% complete 1,000
Units started in process 4,000
Normal spoilage 400
Abnormal spoilage 100
WIP, end 60% complete 600
Assume conversion costs are applied evenly throughout the process.

Required: Determine the EUP using FIFO and Weighted Average.

1. Inspection at the start and materials are added at the start of the process.
2. Inspection at the start and materials are added at the end of the process.
3. Inspection at the end and materials are added at the start of the process.
4. Inspection at the end and materials are added at the end of the process.
5. Inspection point is silent and materials are added at the start of the process.
6. Inspection point is silent and materials are added at the end of the process.
7. Inspection point is at 20% completion and materials are added at the start of the process.
8. Inspection point is at 40% completion and materials are added at the start of the process.
9. Inspection point is at 60% completion and materials are added at the start of the process.
10. Inspection point is at 80% completion and materials are added at the start of the process.

PROBLEM 2
JASSEN Company employs process costing system regarding its 3-point enhancer product. The following data are provided for the year
ended Dec 31, 2022:
a. It is the company’s policy to add conversion cost evenly throughout the period while 4/5 of the direct materials are added at the
start of the process while the remaining direct materials are added at the end of the process.
b. 10% of units started are normally spoiled which all come from the units started.
c. The January 1, 2022 work in process inventory consists of 20,000 units with the following costs: 400,000 direct materials,
500,000 direct labor and 100,000 factory overhead. The beginning inventory is 72% complete as to conversion cost.
d. The total manufacturing costs added during the year consists of P1,000,000 direct materials, P1,200,000 direct labor and
P300,000 factory overhead.
e. The units started during the year totaled 80,000 units while the units completed totaled 60,000 units.
f. The Dec 31, 2022 work in process inventory consists of 10,000 units which is 20% incomplete as to conversion costs.
g. The inspection point occurs when the percentage of completion is 75% as to conversion cost.

Required: Determine the cost per equivalent unit for direct materials and conversion cost using weighted average and FIFO.

PROBLEM 3
The following information is available for ABC Corp. for the current month:
Started this month 120,000
WIP beg, (3/5 complete) 11,250
Total spoilage 3,000
Abnormal spoilage 1,350
WIP end, (30% to be done) ?
Transferred out 108,750
Cost Beg. WIP End WIP
Materials 15,600 180,000
Conversion Cost 20,700 525,915

Requirement: Prepare the cost of production report using FIFO and Weighted Average under the following situation:
1. All materials are added at the start of production and the inspection point is at the end of the process.
2. Materials are added at the start of production and the inspection point is at 60% of the process.

PROBLEM 4
China Manufacturing Company applied process costing in the manufacture of its sole product, “Sinovac”.
 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 Department 1, units are inspected at the end of processing while Department 2, inspection takes place when the units are
90% completed.
 Department 1 uses FIFO costing while Department 2 uses the weighted average costing.

The production data for the month of August show the following:
ACC108: COST ACCOUNTING AND CONTROL
PROCESS COSTING WITH SPOILAGE

Department 1 Department 2
Units
Work in process, beg 20,000 10,000
Work to be done 80% 20%
Work in process, end 30,000 17,500
Work completed 2/3 5/7
Started in process during August 150,000
Normal spoilage (4% of units started in
process) 2,500
Abnormal spoilage (1/4 of normal spoilage) 1,250

Cost
Work in Process, Aug 1:
Transferred in - 285,450
Materials 135,000 214,875
Conversion Costs 97,500 280,725

Current costs:
Transferred in - ?
Materials 1,980,000 840,000
Conversion Costs 3,088,800 1,282,500

1. What is the total costs transferred to Department 2 and the amount of work in process, end in Department 1, respectively?
2. What is the total costs transferred to the Storeroom and the amount of work in process, end in Department 2, respectively?