ACYCST2 ONLINE LEARNING, TERM 3 AY 2019-2020

INSTRUCTOR-LED INDIVIDUAL ACTIVITY: PROCESS COST SYSTEM: SPOILAGE (ADAPTED)

EXERCISE 1
Materials are added at the start of the process in the first department of JG Manufacturing Company. The following
information is available for the month of January 2017:

Units
Work in Process Beginning (60% complete as to conversion costs) 30,000
Started in January 75,000
Transferred Out to Next Department 55,000
Normal Lost Units 15,000
Work in Process Ending (50% complete as to conversion costs) 35,000

The cost of normal lost units are absorbed by the units transferred out to the next department.

1. Using the FIFO method, what is the equivalent units for materials?

EXERCISE 2
Ping Products transferred 15,000 units to the department. An additional 5,000 units were in beginning inventory in the
department. At the end of the month 12,000 units were transferred to the next department, 6000 units remained in work in
process, 40% complete as to conversion costs and the remaining units spoiled at the 75% stage of conversion. Beginning
inventory was 60% complete as to conversion costs and spoiled units were considered normal.

2. What is the equivalent unit for conversion costs using the FIFO costing method?

EXERCISE 3
Jet manufactures a product that passes in four departments. Department 3 had no beginning work in process inventory and
transferred in 18,000 units from Department 2, each with an equivalent unit cost of P12.50. Within Department 3, units for
direct materials, direct labor and manufacturing overhead applied were P8.00, P9.75 and P4.00, respectively. Direct materials
in Department 3 are added at the beginning of the process. Department 3 had 4,800 units in ending work in process inventory
which are 60% complete as to conversion costs.

3. If 620 units were lost in Department 3 at Jet’s inspection point where conversion costs were 45% complete, what was
the total cost of lost units?

EXERCISE 4
Heaven Company adds material at the start of production in the Forming Department. Data related to production in May
2017 are as follows:

Units
Work in Process, May 1 14,000
Started in May 70,000
Completed and Transferred in May 72,000
Normal Lost Units 4,000
Work in Process, May 31 8,000
Materials in beginning work in process P68,000
Cost of Materials added during the month P100,000

Compute the following:

4. Assuming that lost units are ignored in computing equivalent production, what is the equivalent unit of production for
materials under the average method?
5. Using the data in #4, what is the cost per unit of materials?

Page 1 of 2

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Horngren, C., Datar, S. & Rajan, M. (2015). Cost Accounting: A Managerial Emphasis, (15 ed.). Pearson Education, Inc.
 ACYCST2 ONLINE LEARNING, TERM 3 AY 2019-2020

INSTRUCTOR-LED INDIVIDUAL ACTIVITY: PROCESS COST SYSTEM: SPOILAGE (ADAPTED)

EXERCISE 5
Rose Company instituted a new process in July. During the month, 10,000 units were started in Department 1. Of the units
started, 1,000 units were spoiled at the end of the process, and it was considered normal in the operation of the company.
Then, 7,000 units were transferred to Department 2 and 2,000 units remained in work in process at July 31 which was 100%
complete as to materials and 50% complete as to conversion costs. Materials costs of P30,000 and conversion costs of
P45,000 were charged to Department 1 in July.

Compute the following:

6. What were the total unit cost?
7. What were the total costs transferred out to Department 2?

EXERCISE 6
Schiller Company has unit costs of P10 for materials and P15 for conversion costs. There are 4,200 units in ending work in
process which are 25% complete as to conversion costs, and fully complete as to materials cost.

8. How much is the total cost assignable to the ending work in process inventory if the FIFO method is used?

EXERCISE 7
SIMPLE Company manufactures a specialized product. Department 2 adds new material to the units received from
Department 1 at the end of process. A continuous normal loss occurs early in processing. Production and cost data for
Department 2 for the month of April are as follows:

Production record (in units):

In process, April 1-75% complete for conversion cost 4,000
Received from Department 1 20,000
Completed and transferred to finished goods 16,000
Lost in processing (normal) ?
Lost in processing (abnormal) 0
In process, April 30-2/3 complete for conversion cost 6,000

Cost Record:
Work in process inventory, April 1:
Preceding department cost P 620
Material cost 0
Conversion cost 2,000 P2,620
Cost from preceding department in April 1,800
Material cost for April 4,800
Conversion cost for April 10,200

Compute the following using FIFO costing method:

9. Total cost of completed and transferred out.
10. Total cost of work in process end.

EXERCISE 8
CANU Manufacturing decided to analyze certain costs for June of the current year. Units started into production equaled
28,000 and ending work in process equaled 4,000. With no beginning work in process inventory.

11. How much is the conversion cost per unit if ending work in process was 25% complete and total conversion costs
equaled P50,000?

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th
Horngren, C., Datar, S. & Rajan, M. (2015). Cost Accounting: A Managerial Emphasis, (15 ed.). Pearson Education, Inc.