Part 1 Process Costing Without Losses

Solve the following problems CHRONOLOGICALLY, NEATLY and ORDERLY. Show all supporting computations in
good accounting format. Round off all cost per EUP to 4 decimal places and final answers to 2 decimal places.

Use the following information for the next item.

Kenny Donald Company started operations in January 2018 and reported total manufacturing costs of P1,350,240. All
product costs of Kenny Donald are incurred evenly throughout the process. During January, Kenny Donald was able to
complete 50,000 units and had 20,000 units that were 60% complete.

1. How much is the cost transferred out to the succeeding department? ____________________

Use the following information for the next two items.

Minecraft Company manufactures cement blocks for use in the construction of buildings. Data relating to the cement
blocks processed through the first department in the production process, are provided below for November:
Number of % Completion as to % Completion as to % Completion as to
Cement Blocks Materials Direct Labor Overhead
WIP – November 1 40,000 80% 20% 25%
WIP – November 30 80,000 15% 10% 40%
Started into production 300,000
during November

Cost data are as follows:

Materials Labor Overhead
Work in process – November 1 P118,100 P 23,620 P 14,500
Current period costs 537,420 107,700 108,140

2. Using the FIFO method, what are the equivalent units of production for materials? _______________
3. How much should be reported as ending work in process of department 1 using the weighted average
method? _______________

Use the following information for the next three items.

MRC Company processes units using the sequential product flow wherein units undergo Mixing, Forming and Finishing
in that particular order. MRC Company uses the FIFO method. Information for the month for the Forming Department
follows:
Beginning work in process 8,700 units
Transferred in from Mixing Department 34,500 units
Completed and transferred out during the month 32,000 units

Materials are added in the Forming Department as follow: (1) 50% are added at 30% conversion; (2) 30% are added at
60% conversion; (3) 10% are added at 90% completion; (4) remaining 10% are added at the end of the process.

Based on the cost of production report produced by the cost accountant responsible for the Mixing Department, total cost
of units completed and transferred out amounted to P1,224,750.

Half of the beginning work in process was 65% complete as to conversion while the remaining 50% was 20% complete
as to conversion. 80% of the ending work in process was 95% complete as to conversion while the remainder was 40%
complete as to conversion.
Additional cost data for the month are as follows:
Cost of direct materials used P413,820
Conversion costs incurred 329,967

4. What are the equivalent units for conversion costs? _______________

5. What are the equivalent units for direct materials? _______________
6. How many units are in the ending work in process for the Forming Department? _______________

Use the following information for the next three items.

COB Company uses process cost system with a FIFO cost flow assumption to process its product IQ for its BSA
customer, that requires four processes. Work in process in Department 4, the last department, shows the following
data for October: Balance October 1 (1,600 units, 1/4 completed), P8,120; from department 3 (4,300 units), P15,050;
Direct labor,P24,500; Factory overhead, P 6,370. Processing for the Month of October consisted of completing the 1,600
units in process October 1; completing the processing on 3,500 additional units, and leaving 800 units that are 1/4
completed. During November, the charges to work in process, from Department 3 (5,500 units), P16,500; Direct Labor,
P 23,520; Factory Overhead, P 5,880. By November 30, all beginning work in process units were completed, and of the
5,500 new units, 1,500 units were left, only 1/5 completed.
7. What is the unit cost of the completed products on October? _______________
8. What is the cost assigned to work in process inventory on October 31? _______________
9. What is the cost of goods completed and transferred to finished goods on November? _______________
 Mezza Corporation applies materials at the start of the process. Below are the information gathered from the
production department for the month ended October 31, 2018. If the company use WA method, EUP for DM and CC are
70,000 and 61,000, respectively. If FIFO will be used, EUP for DM and CC would be 60,000 and 58,500 respectively.
Units Cost
WIP, 10/1/18 ???
Direct Materials P 31,500
Direct Labor 13,650
Overhead 6,750

Added this period 60,000

Direct Materials P 210,000
Direct Labor 105,300
Overhead 157,950

WIP, 10/31/18 15,000

10. Using WA method, the cost assigned to WIP, end is ______________

11. Using FIFO method, the unit cost of completed units is ______________
12. The percentage of completion of WIP, end is ______________

Part 2 Process Costing With Losses

For the next three items:

UNO Co.'s second department uses the FIFO method. On November 1, the beginning work in process of 45,000
units is 70% complete. During November, 160,000 units were transferred in from the first department of UNO's production
cycle. Furthermore, the number of units in the second department increased by 80,000 units. 150,000 units were
completed by the second department during November. On November 30, the ending work in process, comprised of
120,000 units, is 90% complete. Inspection point is at 95% conversion. Materials are added at 95% conversion
immediately after the inspection point. The acceptable level of normal spoilage per month is a quarter of 1% of all units
placed into production in the current month, after considering accretion, if any.

1. How many spoiled units were considered as abnormal spoilage? _______________

2. What is the equivalent unit of production for direct materials? _______________
3. What is the equivalent unit of production for transferred-in costs? _______________

For the next three items:

Bruns Co. had the following cost and production information from Department 1 for November 2018.

• Normal spoilage is 5% of good units for the period.

• Inspection and identification of spoilage take place at 60% conversion.
• Materials are added as follows: 60% of the materials are added evenly over the first half of conversion. The
remaining balance is added in the pattern as follows: 75% on 65% conversion, 15% on 80% conversion and the
remainder at the end of the process.
• BWIP - 3,500 units with cost of P50,000 (P30,000 for direct materials) and 40% complete as to conversion cost.
Current cost for materials is P199,500 while P182,310 for conversion costs.
• Started units - 14,000 units
• A total of 16,000 units were finished and transferred to Department 2. There are 1,000 units for EWIP, which are
70% complete as to conversion cost.

4. How much is the total cost of units transferred out to Department 2? _______________
5. How much is the total cost of work-in-process as of the end of November? _______________
6. How much is the amount to be charged against current income immediately? _______________

For the next three items, using Weighted Average Method:

Amber Division of Roces Corp produces environmental paints. Amber adds 40% of materials at the start of the
process, additional 20% when upon 30% conversion, additional 30% once the product is half completed and the balance
at the end of the process. Management considers normal spoilage to be 5% of total units put into production this period.
Inspection point is done upon 40% conversion. The following operating statistics are available for October.
 Units Cost
Work in process, 10/1 10,000
Materials 21,420
Conversion Cost 5,040
Started during August 50,000
Materials 112,500
Conversion Cost 134,400
Work in process, 10/31 12,000
Spoiled 3,000

7. What is the equivalent unit of production for direct materials? _______________

8. How much is the amount to be charged against current income immediately? _______________
9. How much is the work in process at the end of October? _______________

For the next three items, using FIFO Method:

Crystal Division of Roces Corp produces high end environmental paints. Crystal adds materials at the start of
the process. Management considers normal spoilage to be 5% of total units put into production. Inspection point is done
upon 40% conversion. The following operating statistics are available for October.
Units Cost
Work in process, 10/1 10,000
Materials 42,000
Conversion Cost 7,424
Started during August 50,000
Materials 150,000
Conversion Cost 196,080
Work in process, 10/31 12,000
Spoiled 3,200

10. What is the equivalent unit of production for conversion cost? _______________
11. How much is the amount of loss absorbed by the work in process inventory at the end of October?
_______________
12. How much is the cost of completed and transferred units? _______________

Part 3 Accounting for Joint and By-Products

Use the following information for the next six items.

Howard Corporation, which manufactures two products out of a joint process, H, and W. The joint costs incurred are
P500,000 for a standard production run that generates 120,000 gallons of H and 80,000 gallons of W. H sells for P4
per gallon while W sells for P7 per gallon.

H can be further processed into H-Plus at P0.10 per gallon while W can be further processed into W-Plus at P1.10 per
gallon. After further processing, H-Plus and W-Plus can be sold for P5 per gallon and P8 per gallon.
1. Assuming that joint costs are allocated on a physical-quantity basis, how much joint cost is allocated
to H? _______________
2. Assuming that joint cost are allocated using the sales value at split-off method, how much joint cost is
allocated to W? _______________
3. Assuming that joint cost are allocated using the net realizable value method, how much is the total
product cost of H-Plus? _______________
4. Assuming that joint costs are allocated using the constant gross margin method, how much is the total
product cost of W-Plus? _______________
5. Should Howard further process H? Indicate how much is the net benefit (cost) of further processing H.
_______________
6. Should Howard further process W? Indicate how much is the net benefit (cost) of further processing
W. _______________

Use the following information for the next two items.

Air Jordan, which uses a joint process to produce three products, A, B and C, all derived from one output. The company
can sell these products at the split-off point or process them further. The joint production costs during December were
P100,000. Air Jordan allocated joint costs using the theoretical net realizable value method. Other information follows:
Product Units produced Sales price at split- Sales price after Unit additional cost
off further processing
A 1,000 P40.00 P50.00 P 7.50
B 2,000 22.50 40.00 12.00
C 1,500 30 37.50 9.00
Beginning balances of the inventories included the following:
Product Number of units Total cost
A 200 P 5,000
B 450 15,300
C 400 8,800
Air Jordan was able to sell 750 units of A during the period and 75% of total units of B available for sale. The ending
inventory of C was 150 units lower than the beginning inventory.

7. How much is the cost of sales of product A during the period? _______________
8. How much is the gross profit on the units sold of product B? _______________
9. How much is the ending inventory to be reported for product C? _______________

Use the following information for the next three items.

Ebonite Company manufactures three products in its production process. It uses a direct materials and it undergoes a
joint production process that will result to Product A and a certain item. The total manufacturing costs of the joint
process amounted to P750,000. Product A is further processed at a cost of P30,000. The certain item is processed
further at a total cost of P80,000 which will result to Product B and Product C. Product B and C is further processed
separately at a cost of P20,000 and P15,000, respectively. Joint costs are to be allocated using the net realizable value
method.

Details about the three products are as follows:

Quantity Selling price per unit
Product A 5,000 P75
Product B 10,000 35
Product C 7,500 40

10. How much is the joint cost allocated to product A? _______________

11. How much is the joint cost allocated to product C? _______________

For the next five items

August Co. produces joint products A and B together with a by-product C. A is sold at split off point but B and C
undergo additional processing. Production data pertaining to these products for year ended Dec. 31, 2017 were as
follows:
A B C TOTAL
Joint cost P3,900,000
Separable cost P1,413,750 P182,000 1,595,750
Production in pounds 325,000 487,500 130,000 942500
Sales price per pound 5 9 3

Case 1
There are no beginning or ending inventories. No materials are spoiled in production. Joint costs are allocated
to joint products using NRV method. The by-product is recognized at the time of production and with selling cost of P0.10
per pound.

12. How much is the joint cost allocated to product A? _______________

13. How much is the cost per pound of product B? _______________

Case 2
There are no beginning inventories. No materials are spoiled in production. Joint costs are allocated using
constant margin approach. The by-product is recognized at the time of sale and with selling cost of P0.10 per pound.
Only eighty percent of production were sold.

14. How much is the joint cost allocated to product A? _______________

15. How much is the cost per pound of product B? _______________
16. How much is the cost of product B sold? _______________

Part 4 Standard Costing

For the next 6 items

Tang Company has made the following information available for its production facility for the current month.
Fixed overhead was estimated at 22,000 machine hours for the production cycle. Actual machine hours for the period
were 19,000, which generated 4,100 units.

Material purchased (80,000 pieces) P336,000

Material quantity variance P11,400 F
Machine hours used (19,000 hours)
VOH spending variance P5,000 U
Actual fixed overhead P60,000
Actual labor cost P46,200
Actual labor hours 7,000

Tang Company’s standard costs are as follows:

Direct material 20 pieces @ P3.80 per piece
Direct labor 1.75 hours @ P6 per hour
Variable overhead
(applied on a machine hour basis) 5 hours @ P2.50 per hour
 Fixed overhead
(applied on a machine hour basis) 5 hours @ P3 per hour

1. Compute for the materials price variance _______________

2. Compute for the amount of materials used _______________
3. Compute the labor rate variance _______________
4. Determine the fixed volume overhead variance _______________
5. What is the actual variable overhead incurred? _______________

For the next 3 items

The following data from Division B of Amiel Corp. were gathered:

Budget Actual
Sales P400,000.00 P415,000.00
Variable COGS 190,000.00 187,000.00
Fixed Manufacturing Cost 40,000.00 46,500.00
Variable Selling 38,000.00 40,000.00
Fixed Admin 20,000.00 22,000.00
Fixed Selling 50,000.00 45,000.00
Operating Income ??? ???

6. If the budget was prepared based on 1,000 units, and the actual units happen to be equal with the plan,
what is the total cost variance? _______________
7. If the budget was prepared based on 1,000 units, and the actual units is 20% more than the plan, what is
the total cost variance? _______________
8. If the budget was prepared based on 1,000 units, and the actual units is 90% of the plan, what is the
variance on its operating income? _______________

For the next two items

LJ Manufacturing Company uses a standard costing system. The company experienced the following result of
direct labor in November 2018. Each product requires 20 minutes to manufacture.

Actual labor costs P509,040

Standard Labor costs P429,000
Actual direct labor rate (per hour) P72
Standard direct labor rate (per hour) P60

9. Compute the number of units produced for the month _______________

10. Determine the labor efficiency variance _______________