FACULTY OF ECONOMICS AND MANAGEMENT
EPPA2033 COST ACCOUNTING
TUTORIAL 6: PROCESS COSTING
SEMESTER 1 SESSION 2024/2025
QUESTION 1
The KulitAsli Company produces wallets through two production departments – Cutting and
Sewing. In the Cutting Department, direct materials, namely synthetic leather, are entered at
the beginning of the process. Direct labour and manufacturing overhead costs are equally
involved in the process. The predetermined overhead rate used for the Cutting Department is
125% of direct labour costs.
The following are the cost of the Cutting Department activities during July:
Work-in-process, July 1 – 20,000 units:
Raw material: 100% complete RM50,000
Conversion: 10% complete 7,200
Balance of work-in-process, July 1 RM57,200
Units started in July 30,000 units
Units completed and transferred out 40,000 units
Work-in-process, July 31: 10,000 units
Raw material: 100% complete
Conversion: 50% complete
Costs incurred during July:
Raw material RM90,000
Conversion:
Direct labour RM86,000
Applied manufacturing overhead RM107,500
Required:
1. Prepare the production report using the method:
a) Weighted-Average
b) First-in-First-out (FIFO)
2. Prepare the Work-in-Process (WIP) account for Cutting Department according to the
requirements in (1).
1
QUESTION 2
The following information is related to Process 1:
Unit Material cost Conversion cost
(RM) (RM)
Beginning WIP (25% complete) 1,000 11,000 3,200
Started in current period 9,000 109,000 52,000
Transferred to Process 2 7,200
Ending WIP (50% complete) 1,200
The normal loss is 800 units, assuming it is detected at the end of the process. All materials are
entered at the beginning of the process, and conversion costs are incurred evenly throughout
the process. It is known that there are unexpected defective units due to an error in temperature
problem. The affected units are at 75% completion.
Required:
a) Prepare the schedule to calculate the cost per equivalent unit using the weighted average
method.
b) Prepare the Work-in-Process (WIP) account for Process 1.
QUESTION 3
Mayday Company is a manufacturer of telecommunication equipment. The product is produced
through two processing departments. The first processing department is the Preparation
Department while the second processing department is the Assembly Department.
The following is the information related to the Preparation Department and the Assembly
Department for September:
• In the Preparation Department, materials are entered at the beginning of the process, while
conversion costs are incurred evenly throughout the process.
o In September, the beginning balance of work-in-process is at 50% complete. It consists
of RM6,000 in material costs and RM2,742 in conversion costs.
o Overhead is applied at 50% of direct labour costs.
o The ending balance of work-in-process in this department is 40% complete.
o Quality inspections will be made at 70% complete. Any damage detected is considered
normal damage and these units have no scrap value.
• For the Assembly Department, the beginning balance of work-in-process is at 75%
complete, while the ending balance is 25% complete. Direct materials are entered at the end
of the process.
2
o The beginning balance consists of RM8,000 costs of previous process and RM10,000
conversion costs.
o The overhead is applied at 100% of direct labour costs.
Additional information for both departments is as follows:
Preparation Assembly
Department Department
Beginning work-in-process units 10,000 12,000
Units started in current period 20,000 25,000
Units completed 25,000 27,000
Ending work-in-process units 4,000 10,000
Current material cost RM22,500 RM14,040
Current labour cost RM8,000 RM12,095
Required:
a. Using the Weighted Average method, prepare the Production Report for the Preparation
Department.
b. Using the FIFO method, prepare the Production Report for the Assembly Department.
QUESTION 4
Greenfurn Company is a furniture manufacturer with two departments: Framing Department
and Finishing Department. The company uses the weighted average method as its costing
system. The following is the data for the Finishing Department for December:
Beginning work-in-process (25% complete)
Units 1,200
Transferred in cost RM8,640
Direct material cost 0
Conversion cost RM5,720
Units started 7,800
Costs added in December:
Transferred in RM73,710
Direct material RM73,165
Conversion RM140,200
Units completed and transferred out 5,800
Spoiled units 1,200
Ending work-in-process units (95% complete) 2,000
3
In the Finishing Department, direct materials are added at the 90% complete and conversion
costs are charged evenly throughout the process. Quality inspection is performed at the 80%
complete. Normal defects are 10% of all units that pass the quality inspection. All defective
units have no residual value.
Required:
a) Prepare the schedule of equivalent unit calculation and calculate the cost per equivalent unit
for the Finishing Department.
b) Prepare the Work-in-Process (WIP) account for the Finishing Department for December.
QUESTION 5
Perusahaan Seri Bunga manufactures a single product that is processed through two production
departments. The company practices a process costing system based on the first-in first-out
(FIFO method). The following is information related to the second department, the Finishing
Department:
Beginning work-in-process units (75% complete) 2,000
Units started 14,000
Units completed 10,000
Ending work-in-process units (85% complete) 4,000
Spoiled units 2,000
Beginning Work-in-Process Costs:
Transferred in cost RM 8,400
Conversion cost RM 16,580
Current period costs:
Transferred in cost RM129,500
Direct material cost RM131,040
Direct labour cost RM127,120
Manufacturing overhead cost RM123,200
The production process in the Finishing Department is carried out as follows:
• Conversion costs are added continuously throughout the process.
• Direct materials are added when the process is 80% complete.
• Quality inspection is performed when the process is 70% complete.
• Normal spoilage is 15% of all units that pass inspection. This spoiled unit has a sale-
value of RM0.20 per unit and this sale is considered immaterial.
4
Required:
a) Prepare the schedule of equivalent units and calculate the cost per equivalent unit for the
Finishing Department (The cost per equivalent unit must be rounded to four decimal points).
b) Prepare a Work-in-Process account for the Finishing Department (Round your answer to
the nearest ringgit).
c) Explain the accounting treatment (including journal entry, if necessary) for the sale of 2,000
spoiled units.
d) Explain how your calculations in question (a) would be different if the weighted average
method were used.