Process Costing : FIFO Method Quantity Schedule

Cost of Production Report-Steps in Preparation Under the Fifo method the physical flow equation in the 1st dept is as follows:
Step 1 - Prepare the quantity schedule Units in process-beginning + = Units in process-beg. finislhed & transferred +
This the the physical flow section and expressed in terms Units started in process Units started, finished & transferred + Units
of departments finished goods in any approriate form of completed still on hand + Units in process-end
measurement such as pieces, liters or kilograms. In subsequent dept, the physical flow equation would be as follows:
Step 2 - Determine the cost to account for. Units in process - beginning + = Units in process-beg, finished & transferred +
The FIFO method assumes beginning work in process Units from preceding deptl Units received, finished & transferred + Units
inventory will be completed before all other units. Therefore completed still on hand + Units in process -end
beg. WP cost are isolated and not included in calculation
of allocation unit cost. Allocation unit cost is cost of Materials Using Fifo method, prepare the quantity schedule:
Labor and Overhead divided by EP of each cost element. Problem 1 Problem 1 -solution
Step 3 - Compute the allocation unit cost. (also called equivalent unit Work in process-Apr 1 9,600 units Quantity Schedule Units
cost. For the 1st dept. computation is as follows: Started in process 70,000 units WP - beginning 9,600
Materials = Cost of materials added during the month Transferred out ? units Started in process 70,000
Equivlent units of Production (EP) for material cost Completed & on hand 8,400 units Units to account for 79,600
Labor = Cost of labor added during the month Work in process Apr 30 3,600 units WP-beg, finished & transferred 9,600
EP for labor cost Started, finished & transferred 58,000
Overhead = Cost of overhead added durin the month Problem 2 Completed & on hand 8,400
EP for Manufacturing overhead Work in process-Oct 1 6,700 units WP-end 3,600
Step 4 - Distribute the cost. The costs that the dept. is responsible for Started in process 40,000 units Units accounted for 79,600
must now be properly allocated.Under Fifo costs are allocated Transferred out 22,000 units Problem 4
to the following groups: Completed & on hand 9,000 units Work in process - June 1 7,500 units
a. WP (beg) finished & transferred Work in process Oct 30 ? units Rec'd from preceding dept 60,000 units
b. Started or received, finished & transferred Problem 3 Transferred out 41,000 units
c. Completed but on hand Work in process-Mar1 ? units Completed & on hand ? units
d. Work in process-end Started in process 10,000 units Work in process-June 30 18,300 units
e. Normal lost units (if any) and Started, finished & trans 1,500 units
f. Abnormal lost units Completed & on hand 3,500 units
WP Mar 31 (equal to 1/2
of total units transferred) ? units page1
EQUIVALENT UNITS OF PRODUCTION (EP) a. solution- 100% of materials added at atart of processing
Actual Material Costs Conversion Costs
EP or EUP represents the number of units that could have been completed from Units w/d EP wd EP
the materials, labor and overhead used during the said period. It is computed by Quantity Schedule:
restating the units in beg and ending work in process in terms of completed units Work in process-Jun 1 5,000
plus the units actually completed. Started in process 25,000
Application of Materials Units to account for 30000
1. At the start of processing
2. At the end of processing or WP-Jun1, finished & transferred 5,000 0% 0 3/5 3,000
3. As producttion progresses Started, finished & transferred 21,000 100% 21,000 100% 21,000
Work in process-Jun 30 4,000 100% 4,000 4/5 3,200
Illustrative Problem- Assume the following production data Z Company: Units accounted for 30,000
Work in process, June 1 5,000 units Total equivalent production 25,000 27,200
(stage of completion 2/5)
Started in process 25,000 units b. solution- 100% of materials applied at end of processing
Transferred out 26,000 units Quantity Schedule: Units
Work in process, June 30 4,000 units Work in process-Jun 1 5,000
(stage of completion, 4/5) Started in process 25,000
The stages of completion indicated above refer to conversion costs Units to account for 30000
which are evenly applied throughout the process.
Required: WP-Jun1, finished & transferred 5,000 100% 5,000 3/5 3,000
a. 100% of materials applied at the start of processing. Started, finished & transferred 21,000 100% 21,000 100% 21,000
b. 100% of materials applied at the end of processing. Work in process-Jun 30 4,000 0% 0 4/5 3,200
c. 50% materials are issued at start,and the balance when 1/2 completed. Units accounted for 30,000
d. 50% materials added at start, 20% added when 1/2 completed, and the Total equivalent production 26,000 27,200
balance added at the end of processing.

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 c. solution - 50% materials are issued at start of processing and the balance when 1/2 completed.
Actual Material Costs Conversion Costs a. continutation of problem..
Units w/d EP wd EP In this department , 20% materials are applied at start of processing, and
Quantity Schedule: the balance at the end of processing. Conversion costs are uniformly incurred
Work in process-Jun 1 5,000 throughout the process.
Started in process 25,000
Units to account for 30000 b. Work in process, May 1 9,000 units
WP-Jun1, finished & transferred 5,000 50% 2,500 3/5 3,000 stage of completion:
Started, finished & transferred 21,000 100% 21,000 100% 21,000 Material costs 1/3; CC, 80%
Work in process-Jun 30 4,000 100% 4,000 4/5 3,200 Started in process 21,000 units
Units accounted for 30,000 Transferred out 25,000 units
Total equivalent production 27,500 27,200 Completed & on hand 3,000 units
d. solution- 50% materials added at start, 20% when 1/2 completed & balance at end. Work in process, May 31 2,000 units
Quantity Schedule: stage of completion:
Work in process-Jun 1 5,000 Material costs, 1/4; CC 35%
Started in process 25,000 c. Work in process, Jun 1
Units to account for 30000 Block A 1/4 complete 4,000 units
WP-Jun1, finished & transferred 5,000 50% 2,500 3/5 3,000 Block B 2/3 complete 6,000 units
Started, finished & transferred 21,000 100% 21,000 100% 21,000 Transferred out 3,000 units
Work in process-Jun 30 4,000 70% 2,800 4/5 3,200 Cpmpleted & on hand 4,000 units
Units accounted for 30,000 Work in process, Jun 30 18,000 units
Total equivalent production 26,300 27,200 stage of completion 4/5
In this dept., 100% materials are applied at the start of processing. Conversion
Following the format shown above, prepare the quantity schedule showing the costs are uniformly applied throughout the processing.
equivalent production for each of the following cases:
a. Work in process, Feb 1 ? units d. Work in process, Jun 1 ; 2/5 complete ? units
Stage of completion 3/4 Started in process 23,000 units
Transferred out 21,000 units Transferred out 24,000 units
Started in process 21,000 units Completed and on hand 3,000 units
Completed and on hand 2,000 units Work in process,Jun 30; 65% complete 4,000 units
Work in process, Feb 28 ? units In this dept. 30% materials are applied when the process is 1/4 completed, 40%
(equal to 60% of the beginning process & are 5/6 complete. added when 1/3 completed, and the balance when 3/5 completed. Conversion costs are applied evenly throughout the process.
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Illustrative Problem: Grace Inc. maintains two deoartments in the
month of Sept. showed the following: Material Cost Conversion Cost
Units work done EP wd EP
Mixing Department Quantity Schedule
Work in process, Sept 1 18,000 units Work in process, Sept 1 18,000
Completion stage, 2/3 as to labor & overhead Started in process 32,000
Transferred to Forming Dept. 38,000 units Units to account for 50,000
Work in process, Sept. 30 12,000 units WP, Sept. 1, finished & transferred18,000 0% 0 1/3 6,000
Completion stage, 1/4 as to labor & overhead Started, finished & transferred 20,000 100% 20,000 100% 20,000
Work in Process, Sept 1 P35,200.00 Work in process, Sept 30 12,000 100% 12,000 1/4 3,000
Cost added in Sept.: Units accounted for 50,000
Materials costs P48,000.00 Total equivalent production 32,000 29,000
Labor costs P14,500.00
Applied Overhead costs P14,500.00 Material Labor Overhead
Cost Schedule Total Costs Costs Costs
In the Mixing Dept. 100% of materials are applied at the start of Cost, last month 35,200
processing. Labor and overhead costs are applied evenly Cost, this month: 77,000 48,000 14,500 14,500
throughout the processing period. Total costs to account for 112,200
Required: Prepare the cost of production report for the Mixing Equivalent production 32,000 29,000 29,000
Dept. for the month of September. Allocation unit costs 2.5 1.5 0.5 0.5

Heading: WP-9/1 Started WP

Grace Inc Allocation of Costs Total F&T F & T Sept 30
Cost of Production Report-Mixing Dept Cost, last month 35,200 35,200
For the Month Ended September 30, 2020 Cost, this month
Material costs 48,000 30,000 18,000
Labor costs 14,500 3,000 10,000 1,500
Overhead costs 14,500 3,000 10,000 1,500
Total costs accounted for 112,200 41,200 50,000 21,000
Transferred to Forming Dept. -91,200 -41,200 -50,000
Work in process, Sept 30 21,000 21,000
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Journal entries - Pertinent entries for Mixing Dept Illustrative Problem-Second dept.
For the month of Sept., the production supervisor of the Forming Dept. of Grace Inc. provided the following indormation:
a Work in process-Mixing deptt 48,000
Raw materials inventory 48,000 Forming Dept.
Issuance of materials to Mixing Dept Production statistics:
Work in process, Sept 1, 1/2 complete as to labor & overhead 4,000 units
b Work in process-Mixing deptt 14,500 Transferred to the warehouse 36,000 units
Sundry credits 14,500 Work in process, Sept 30, 1/6 complete as to labor & overhead 6,000 units
Factory payroll assigned to Mixing Dept Production Costs:
Work in process, Sept 1, P8,000
c Work in process-Mixing deptt 14,500 Cost received from Mixing dept 91,200
Manufacturing overhead 14,500 Cost added in Sept.:
Overhead applied to Mixing dept Material cost 18,000
Labor Cost 25,000
d Work in process-Forming Dept 91,200 Overhead costs 10,000
Work in process-Mixing Dept 91,200
Completed units transferred to Forming Dept In the formng dept. 100% of materials are applied at the end of processig. Labor and overhead
costs are uniformly applied throughout the processing.
e Finished goods xxx Required: Prepare the cost of production report for the Forming Dept. for the month of Sept.
Work in process-Forming xxx
Finished goods completed Actual Trans-in Material Costs Conversion Costs
Units Cost work done EP work done EP
f. Accounts receivable xxx Quantity Schedule:
Sales xxx Work in process, Sept 1 4,000
Receiveds from Mixing Dept 38,000
g Cost of goods sold xxx Units to account for 42,000
Finished goods xxx
WP beg. finished & transferred 4,000 100% 4,000 50% 2,000
Heading Received, finished & transferred 32,000 32,000 100% 32,000 100% 32,000
Frace Inc. Work in process, Sept. 30 6,000 6,000 0% 0 1/6 1,000
Cost of Production Report-Forming Dept 42,000
For the Month Ended September 30, 2020 Total equivalent Production 38,000 36,000 35,000
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 Trans- in Material Labor Overhead
Cost Schedule Total Cost Costs Costs Costs
Cost, last month 8,000
Cost, from preceding dept (Mixing) 91,200 91,200
Cost, this dept 53,000 18,000 25,000 10,000
Total costs to account for 152,200
Equivalent production 38,000 36,000 35,000 35,000
Allocation unit costs 3.9 2.4 0.5 0.71429 0.28571

WP Sept 1 Received WP
Allocation of Costs Total F&T F&T Sept 30
Cost, last month 8,000 8,000
Cost from preceding deot (Mixing) 91,200 76,800 14,400
Cost this deot:
Material costs 18,000 2,000 16,000 0
Labor costs 25,000 1,429 22,857 714
Overhead costs 10,000 571 9,143 286
Total costs accounted for 152,200 12,000 124,800 15,400
Transferred to the warehouse -136,800 -12,000 -124,800
Work in process-Sept 30 15,400 15,400

Practice Problem: Prepare a cost of production report for the Machining dept. for the month of June.
The Reyes Company manufactures a single product. Its operations are a continous process carried on in two depts. -
Machining and Finishing. For the month of June, the company records indicated the following production statistics for
the machining deoartment:
Units in process, June 1 10,000 Cost records show the following charges for the month of June:
completion stage: Materials 100%; Conversion 70% Work in process, June 1 P 51,000
Units started in process 70,000 Added during the month:
Units completed and on transferred out 60,000 Materials costs P210,000
Units in process, June 30 20,000 Labor costs P115,000
completion stage: Materials 100%; Conversion 60% Overhead costs P 80,000 page 6
continuation of the Reyes Company
In the Finishing Dept.materials are added to the production costs.
For the month of June, the company records indicated the following
data:
Units in process, June1 5,000
Completion stage: Materials 100%; Conversion 40%
Units received from Machining Dept 60,000
Units completed and transferred out 57,000
Units in process, June 30 8,000
Completion stage: Materials 100%; Conversion 50%

Costs records showed the following charges to Finishing Dept.:

Work in process, June 1 P 43,500
Cost received from Machining Dept. 300,000
Costs added in June:
Material costs 90,000
Labor costs 118,000
Overhead costs 59,000

Required: Prepare a cost of production report for the Finishing Dept.

for the month of June.

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