PROCESS

COSTING
Sample Problems
COSACIE
REVIEW:
 What is Process Costing?
 What is the difference between Process Costing and Job
Order Costing?
 What does COPR stand for?
 What are the two essential parts of COPR?
 What is the difference between FIFO Method and Weighted
Average Method?
 What is the difference between even application and
uneven application of cost elements?
 What does EP stand for?
 Total number of
EQUIVALENT units processed
How many units absorbed
during that
materials and conversion
PRODUCTION (EP) process/in that
department
elements?

Actual Materials &

EPM EPC Conversion elements spread

out during a process/in a
particular department

# of units from the beginning

WIPBeg. WIPBeg. inventory that will still be
processed in the department

# of units from the previous

process/department that will
Started to Process Started to Process be processed in the
department

# of units from the ending

WIPEnding WIPEnding inventory that have been
completed in the department

Denominator for material and

Total EPM & EPC conversion unit costs
computation
 EQUIVALENT
PRODUCTION (EP)
Started to Process(Quantity Schedule) ≠ Started to Process(Finished & Transferred)

EPM EPC

WIPBeg. WIPBeg.
Total # of units
transferred to the next
process/department
Started to Process Started to Process

What’s left from the

original Started to
WIPEnding WIPEnding Process (from the
Quantity Schedule)

Total EPM & EPC Not yet transferred to

the next department
Started to Process
≠ (Quantity Schedule) ≠ Started to Process(Finished & Transferred)
Still to be
Finished Finished
Still to be
processed
Still to be
Finished Finished
processed
Still to be
processed
Still to be
Finished EP = % not Finished
processed
Still to be EP = 100%
Finished
processed
Still to be Finished
processed
Still to be
processed yet complete Finished
processed
(transferred to the
next
department/process)
*Started to
Process(Finished & Transferred)

Still to be
Finished processed
Still to be
Finished Finished
WIPEnding processed
Still to be
Finished WIPEnding
processed
from the for the current month
previous (what’s left in the
month department that were
(% complete) Started to not yet transferred)
WIPBeg.
Process
(original – from Quantity Schedule)

Will absorb costs

incurred in this
department during
the current period
ILLUSTRATIVE
PROBLEM # 1:

5/8 will be
Quantity processed
Schedule
3/5 still in WIP
(not finished)
ILLUSTRATIVE PROBLEM # 1: Genius Company
(a) FIFO – Even Cost of Production Report
For the month ended January, 1997
Department ---

Quantity Schedule Physical Units

WIP, beg 8,000
Started to process 40,000
Total Units to be Accounted for 48,000

Finished and transferred to the next Units WD M EP M WD C EP C

department:
WIP, beg 8,000
c 5/8 5,000 5/8 5,000
Started to process 35,000 1 35,000 1 35,000
Total Units Transferred
c
43,000 40,000 40,000
WIP, ending c
5,000 2/5 2,000 2/5 2,000
Total Units as Accounted for 48,000 42,000 42,000
c
Cost Analysis Amount Unit Cost
Cost WIP beg P 6,000
Cost from previous department - -
Cost incurred during the month 38, 000
Material 38,000 P 0.9047619 =
c
Labor 32,000 42, 000
32, 000 +14, 000
Overhead
Total Cost to be Accounted for
14,000
P 90,000
c = 42, 000
P 1.0952381
c
Finished and transferred to the next Amount
department:
WIP, beg
Cost last month P 6,000
Cost this month 10,000 (5, 000 ´ 0.9047619)+ (5, 000 ´1.0952381)
Started to process
Cost from previous department -
Cost this month 70,000 ´ 0.9047619)+ (35, 000 ´1.0952381)
(35, 000 ________
Total Cost of Transfer P 86,000
WIP, ending
Cost from previous department -
Cost this month 4,000 (2, 000 ´________
0.9047619)+ (2, 000 ´1.0952381)
Total Cost as Accounted for P 90,000
ILLUSTRATIVE
Material
50% 30% 20%

PROBLEM # 1: 0%
Process
50% 75% 100%

5/8 will be
processed

3/5 still in WIP

(not finished)
ILLUSTRATIVE PROBLEM # 1: Genius Company
(b) FIFO – Uneven Cost of Production Report
For the month ended January, 1997
Department ---

Quantity Schedule Physical Units

WIP, beg 8,000
Started to process 40,000
Total Units to be Accounted for 48,000
Material
50% 30% 20%
Finished and transferred to the next Units WD M EP M WD C EP C
department:
WIP, beg 8,000 0.5 4,000 5/8 5,000
0% 50% 75% 100% Started to process 35,000 c
1 35,000 1 35,000
c
Process
3/8 2/5
Total Units Transferred c
43,000
c c
39,000 c
40,000
WIP, ending 5,000 0.5 2,500 2/5 2,000
Total Units as Accounted for 48,000 41,500 42,000

Cost Analysis Amount Unit Cost

Cost WIP beg P 6,000
Cost from previous department - -
Cost incurred during the month 38, 000
Material 38,000 c
P 0.91566265 =
Labor 32,000 41, 500
32, 000 +14, 000
Overhead 14,000 P 1.0952381 =
Total Cost to be Accounted for P 90,000
c 42, 000
c
Finished and transferred to the next Amount
department:
WIP, beg
Cost last month P 6,000
Cost this month 9,138.84 (4, 000 ´ 0.91566265)+ (5, 000 ´1.0952381)
Started to process
Cost from previous department -
Cost this month ´ 0.91566265)+ (35, 000 ´1.0952381)
70,381.53 (35, 000 ________
Total Cost of Transfer P 85,520.37
WIP, ending
Cost from previous department -
Cost this month 4,479.63 (2, 500 ´________
0.91566265)+ (2, 000 ´1.0952381)
Total Cost as Accounted for P 90,000
ILLUSTRATIVE
PROBLEM # 2:

5/10 still in WIP

(not finished)
 Jasmine Manufacturing Company
ILLUSTRATIVE PROBLEM # 2:
Cost of Production Report
(a) WAM– Even
For the month ended February
Department ---

Quantity Schedule Physical Units

WIP, beg 7,000
Started to process 43,000
Total Units to be Accounted for 50,000

Finished and transferred to the next Units WD M EP M WD C EP C

department:
WIP, beg
Started to process
Total Units Transferred 40,000 1 40,000 1 40,000
WIP, ending 10,000 5/10 5,000 5/10 5,000
Total Units as Accounted for 50,000 45,000 45,000

Cost Analysis Amount Unit Cost

Cost WIP beg
Material P 10,300
Labor 8,200
Overhead 7,100
Cost from previous department - -
Cost incurred during the month 10,300 + 47, 300
Material 47,300 P 1.28 =
Labor 41,300 45, 000
Overhead 24,400 P 1.80 =
8, 200 + 7,100 + 41,300 + 24, 400
Total Cost to be Accounted for P 138,600 45, 000

Finished and transferred to the next Amount

department:
WIP, beg
Cost last month
Cost this month
Started to process (40, 000 ´1.28)+ (40, 000 ´1.80)
Cost from previous department
Cost this month ________
Total Cost of Transfer P123,200
WIP, ending
Cost from previous department -
Cost this month P15,400 (5, 000 ´1.28)+ (5, 000 ´1.80)
_________
Total Cost as Accounted for P 138,600
ILLUSTRATIVE
Material
50% 30% 20%

PROBLEM # 2: 0 3 days
Process
6 days 10 days

5/10 still in WIP

(not finished)
 Jasmine Manufacturing Company
ILLUSTRATIVE PROBLEM # 2:
Cost of Production Report
(b) WAM – Uneven
For the month ended February
Department ---

Quantity Schedule Physical Units

WIP, beg 7,000
Started to process 43,000
Total Units to be Accounted for 50,000
Material
Finished and transferred to the next Units WD M EP M WD C EP C
50% 30% 20% department:
WIP, beg
Started to process
0 3 days 6 days 10 days Total Units Transferred 40,000 1 40,000 1 40,000
WIP, ending 10,000 0.8 8,000 5/10 5,000
Process
5 days Total Units as Accounted for 50,000 48,000 45,000

Cost Analysis Amount Unit Cost

Cost WIP beg
Material P 10,300
Labor 8,200
Overhead 7,100
Cost from previous department - -
Cost incurred during the month 10,300 + 47, 300
Material 47,300 P 1.20 =
Labor 41,300 48, 000
8, 200 + 7,100 + 41,300 + 24, 400
Overhead 24,400 P 1.80 =
Total Cost to be Accounted for P 138,600 45, 000

Finished and transferred to the next Amount

department:
WIP, beg
Cost last month
Cost this month
Started to process (40, 000 ´1.20)+ (40, 000 ´1.80)
Cost from previous department
Cost this month ________
Total Cost of Transfer P120,000
WIP, ending
Cost from previous department -
Cost this month P18,600 ´1.20)+ (5, 000 ´1.80)
(8, 000 _________
Total Cost as Accounted for P 138,600