I. TERMS USED IN PROCESS COSTING: ABNORMAL LOSS-A loss in excess of the normal, predicted tolerance limits.

The cost of abnormal losses should be accumulated and treated as a loss in the period in which those losses occurred. AVERAGE METHOD-The cost of each equivalent unit contains a portion of the cost in beginning inventory and a portion of the cost added during the current period. CONTINUOUS LOSS-A loss that is assumed to occur uniformly throughout the production process. It may be normal or abnormal. CONVERSION COST- Direct labor plus manufacturing overhead cost. COST RECONCILIATION-The part of a departments production report that shows the cost to be accounted for during the period and how those costs are accounted for. DEFECTIVE UNIT-It is a unit that has been rejected at a control inspection point for failure to meet appropriate standards of quality or designated product specifications and can be economically reworked and sold through normal distribution channels. DISCRETE LOSS-A loss that occurs at a specific point in the production process. This may also be normal or abnormal. EQUIVALENT UNITS OF PRODUCTION (WEIGHTED-AVERAGE METHOD)-The units transferred to the next departments department (or to finished) during the period plus the equivalent units in the departments ending work in process. EQUIVALENT UNITS OF PRODUCTION-Amount of a resource that is required to complete one unit of product with respect to the cost elements being considered. FIFO METHOD-Under this cost flow assumption, the costs of the first units transferred out of the department are deemed to come from beginning inventory. NORMAL LOSS-Falls within a tolerance level expected during the production. It is considered a product cost and is included as part of cost of the goods units resulting from the process. OPERATION COSTING-Refers to the methods where each operation in each stage of production or process is separately costed; the cost of finished unit is determined; this is suitable to industries dealing with mass production of repetitive nature.
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PROCESS COSTING-A costing method is applicable where goods or services result from a sequence of continuous or repetitive operations or processes and products are identical and cannot be segregated. PROCESSING DEPARTMENT-Any part of an organization where work is performed on a product and where materials, labor, or overhead costs are added to the product. PRODUCTION REPORT-A report that summarizes all activities in a departments work in process account during a period and that contains three parts; a quantity schedule and computation of equivalent units; a computation of total and unit costs, and cost reconciliation. QUANTITY SCHEDULE-The part of a production report that shows the flow of units through a department during a period and a computation of equivalent units. SINGLE OR OUTPUT COSTING-It is used when the production is uniform and identical and a single article is produced; the total production cost is divided by the number of units produced to get unit or output cost. TRANSFERRED-IN COST- Cost attached to products that have been received from a prior processing department. SHRINKAGE-It is a decrease in units arising from an inherent characteristic of the production process. It includes decrease caused by evaporation, leakage and oxidation. SPOILED UNIT-It is a unit that is rejected at a control inspection unit for failure to meet appropriate standards of quality or designated product specifications and cannot be economically reworked to be brought up to standard.

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II. CHARACTERISTICS AND PROCEDURE OF PROCESS COSTING SYSTEM: The characteristics of process costing system: 1. A cost of production report is used to collect, summarize and compute total and unit costs. 2. Production is accumulated and reported by departments. 3. Costs are posted to departmental work in process accounts. 4. Production in process at the end of a period is restated in terms of completed units. 5. Total cost charged to a department is divided by total computed production of the department in order to determine a unit cost for a specific period. 6. Costs of completed units of a department are transferred to the next processing department in order to arrive at the total costs of the finished products during a period. At the same time, costs are assigned to units still in process. The procedures of process costing are designed to: 1. Accumulate materials, labor, and factory overhead costs by departments. 2. Determine a unit cost for each department. 3. Transfer costs from one department to the next and to finished goods. 4. Assign costs to the inventory of work in process (WIP)

Note: If accurate units and inventory costs are to be established by process costing procedures, costs of a period must be identified with units produced in the same period.

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III. PROCEDURES FOR MATERIALS, LABOR, AND FACTORY OVERHEAD COSTS ACCUMULATIONS: Materials Costs: In job order costing system, materials requisitions are used to charge jobs for direct materials used. If requisitions are used in process costing, details are considerably reduced because materials are charged to departments rather than to jobs, and the number of departments using materials is usually less than the number of jobs a firm might handle at a given time. Frequently materials are issued only to the process-originating department; subsequent department other than the first, they are charged to that department performing the specific operation. For materials control purposes, materials need not always be priced individually on requisition forms. The cost of materials used can be determined at the end of the production period through inventory difference procedures, i.e., adding purchases to beginning inventory and then deducting ending inventory. Or consumption reports which state the cost of materials or quantity of materials put into process by various departments can be used. Costs or quantities charged to departments by consumption reports may be based on formulas or proration. Formulas specify the type and quantity of materials required in the various products and is applied to finished production in order to calculate the materials consumed. Chemical and pharmaceutical industries use such procedures, particularly when more than one product is manufactured by a department. Frequently the cost of materials used by a department must by prorated to different products on various estimated bases. This portion is described in chapter By-Products and Joint Products Costing. For any of the materials cost computation methods discussed, a typical journal entry charging direct manufacturing materials used during a period is: Work in Process - Blending department Materials 24,500 Dr. 24,500 Cr.

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The source of the cost figures for the above entry as well as the entries for labor and factory overhead is the cost of production report which is discussed on cost of production report page. Direct Labor: Labor costs are identified by and charged to departments in process costing, thus eliminating the detailed clerical work of accumulating labor costs by jobs. Daily time tickets or weekly time clock cards are used instead of job time tickets. Summary labor charges are made to departments through an entry which distributes the direct manufacturing payroll: Work in Process - Blending department Work in Process - Testing Departments Work in Process - Terminal Department Payroll Factory Overhead Costs: Factory overhead incurred in process costing as well as in job order costing should be accumulated in the factory overhead subsidiary ledger for producing and service departments. This procedure is consistent with requirements for responsibility accounting and responsibility reporting. Normally it is emphasized to use the predetermined overhead rates for charging overhead to jobs and products. However, in various process and job order costing procedures, actual rather than applied overhead is sometimes used for product costing. This practice is feasible when production remains comparatively stable from period to period, since factory overhead will then remain about the same from one month to the next. The use of actual overhead can also be justified when factory overhead is not and important part of total cost. However, predetermined overhead rates for producing departments should be used if: 1. Production is not stable. 2. Factory overhead, especially fixed overhead, is a significant cost.
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29,140 37,310 32,400

Dr. Dr. Dr. 98,850 Cr.

Fluctuations in production can lead to the unequal incurrence of actual factory overhead from month to month. In such cases, factory overhead should be applied to production using predetermined rates, so that units produced receive proper charges for factory overhead. Similarly, if factory overhead - especially fixed factory overhead - is significant, it is desirable to allocate factory overhead on the basis of normal or uniform production using predetermined overhead rates. Indeed, the use of predetermined rates is highly recommended for improving cost control and facilitating cost analysis. Prior to charging factory overhead to departments via their respective work in process accounts, expenses must be accumulated in a factory overhead control account. As expenses are incurred the entry is:

Factory overhead control Accounts Payable Accumulated Depreciation - Machinery Prepaid Insurance Materials Payroll

xxxxx

Dr. xxxxx xxxxx xxxxx xxxxx xxxxx Cr. Cr. Cr. Cr. Cr.

The use of factory overhead control account requires a subsidiary ledger for factory overhead, with departmental expense analysis sheet to which all expenses are posted. Service department expenses are kept in like manner and distributed later to producing departments. At the end of each period, departmental expense analysis sheets are totaled. These totals, which also include distributed service department costs, represent factory overhead for each department. By debiting the actual cost incurred or by using the predetermined overhead rates multiplied by the respective actual activity base (e.g., direct labor hours) for each producing department, the entry charging these expenses to work in process is as follows:

Work in Process - Blending department Work in Process - Testing Departments

28,200 32,800

Dr. Dr.
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Work in Process - Terminal Department Factory Overhead Control

19,800

Dr. 80,800 Cr.

IV. SIMILARITIES BETWEEN JOB ORDER AND PROCESS COSTING SYSTEM: Similarities between job order and process costing systems: 1. Both systems have the same basic purposes-to assign material, labor, and overhead costs to products and to provide mechanism for computing unit product cost. 2. Both systems use the same basic manufacturing accountants, including manufacturing overhead, Raw materials, Work in process, and Finished Good. 3. The flow of costs through the manufacturing accounts is basically the same in both systems. Difference between Job Order and Process Costing: These differences are summarized below: Job Order Costing 1. Many different jobs are worked on during each period, with each job having different production requirements. 2. Costs are accumulated by individual job. 3. Job cost sheet is the key document controlling the accumulation of costs by a job. Process Costing 1. A single product is produced either on continuous basis or for long periods. All units of product are identical. 2. Costs are accumulated by departments. 3. The department production report is the key document showing the accumulation and disposition of costs. 4. Unit costs are computed by department on the department production report.

4. Unit costs are computed by job on the job cost sheet.

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V. AVERAGE COSTING METHOD VERSUS FIFO COSTING METHOD: A. Advantages of Average Costing and FIFO costing Both average costing and FIFO costing have certain advantages. It would be arbitrary to state that one method is either simpler or more accurate than the other. The selection of either method depends entirely upon management's opinion regarding the most appropriate and practical cost determination procedures. B. Basic difference between the average costing and FIFO costing method The basic difference between the average costing and FIFO costing method concerns the treatment of beginning work in process inventory. The averaging method adds beginning work in process inventory costs to the preceding department's materials, labor and factory overhead costs incurred during a period. Unit costs are determined by dividing these costs by equivalent production figures. Units and costs are transferred to the next department as one cumulative figure. The FIFO method retains the beginning work in process inventory cost as a separate figure. Costs necessary to complete the beginning work in process units are added to this total cost. The sum of these two costs totals is transferred to the next department. Units started and finished during the period have their own unit cost which is usually different from the completed unit cost of the units in process at the beginning of the period. The FIFO method thus separately identifies for management the current period unit cost originating in a department. Unfortunately, the costs are averaged out in the next department, resulting in a loss of much of the value associated with the use of the FIFO method. If the FIFO method is used, units lost during a period must be identified as to whether they came from in process at the beginning or from units received during the period. Also, in computing equivalent production figures in FIFO costing, the degree of completion of both the beginning and ending work in process inventories must be considered.

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C. Disadvantage of FIFO costing The principle disadvantage of FIFO costing is that if several unit cost figures are used at the same time, extensive detail is required within the cost of production report which can lead to complex procedures and even inaccuracy. Whether the extra detail yields more representative unit costs than the average costing method is debatable, especially in a firm using process costing where production is continuous and more or less uniform and appreciable fluctuations in unit costs are not expected to develop. Under such conditions, the average costing method leads to more satisfactory cost computations. VI. COST OF PRODUCTION REPORT (CPR): A. Definition and Explanation of Cost of Production Report (CPR): A departmental cost of production report (CPR) shows all costs chargeable to a department. It is not only the source for summary journal entries at the end of the month but also a most convenient vehicle for presenting and disposing of costs accumulated during the month. A cost of production report shows: 1. Total unit costs transferred to it from a preceding department. 2. Materials, labor, and factory overhead added by the department. 3. Unit cost added by the department. 4. Total and unit costs accumulated to the end of operations in the department. 5. The cost of the beginning and ending work in process inventories. 6. Cost transferred to a succeeding department or to a finished goods storeroom. It is customary to divide the cost section of the report into two parts: one shows costs for which the department is accountable, including departmental and cumulative total and unit costs, the other showing the disposition of these costs. A quantity schedule showing the total number of units for which a department is accountable and the disposition made of these units is also part of each department's cost of production report. Information in this schedule, adjusted for equivalent production is used to determine the unit costs added by a department, the costing of the ending work in process inventory, and the cost to be transferred out of the department.
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A cost of production report determines periodic total and unit costs. However, a report that would merely summarize the total costs of materials, labor, and factory overhead and shows only the unit cost for the period would not be satisfactory for controlling costs. Total figures mean very little; cost control requires detailed data. Therefore, in most instances, the total cost is broken down by cost elements for each department head responsible for the costs incurred. Furthermore, detailed departmental figures are needed because of the various completion stages of the work in process inventories. Either in the cost of production report itself or in the supporting schedules, each item of material used by a department is listed; every labor operation is shown separately; factory overhead components are noted individually; and a unit cost is derived for each item. To condense the illustrated cost of production reports, only total materials, labor, and factory overhead charged to departments are considered; and unit costs are computed only for each cost element rather than for each item.

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VII. COMPREHENSIVE PROBLEMS: Problem 1: (FIFO Method)

Department 1 Department 3 Department 4 Department 7 Finished Goods

Given Data: Department 1: Transferred Out (60%-dept.2, 40%-dept.3) Department 2: normal loss, at the start Abnormal loss, 2 /3% done Uneven application of cost 100% increase in material Department 3: normal loss, during process Department 4: normal loss, 1 /2% done Department 5: 20% increase in units, additional materials evenly throughout the process Normal loss, end Department 6: Evaporation, 4% and 5 days Department 7: 25% increase, additional of materials at the start Table 1.1 1 2 3 4 5 6 Beginning 2952, 2000 1 /4 5400 2 /3 8000 1 /4 1900 1 /5 2000 2 /5 2days Placed in process 32000 Rec. from preceding 60% 40% dept. 18600 12400 14000 18300 23260 Ending 3000 1 /2 700 1 /7 600 1 /2 1800 1 /4 500 1 /5 968, 4days Normal loss 2000 2000 2000 2000 1 /2 200 Abnormal loss 3000 2 /3 Cost, beg. 19500 6960 6270 11879 1569.9 5781.8 Cost, this dept. material 32000 20750 24150 8485 22760 12OO7 labor 16000 8370 12075 6788 18208 84O4.9 overhead 9600 5580 7245 3687 4552 6OO3.5

7 3125 3 /5

159OO 1O75 3 /5

1692.2

11925 4139 4139

Solution on Problem no.1:

Sulpicio Mfg. Co. Cost of Production Report for the month ended August 31, 2O12 Department 1 Actual 2000 32000 34000 2000 29000 3000 34000 Work done EUP

Quantity Schedule In process, beginning Placed in Process units to be accounted for In process, beginning Placed in Process In process, ending Units accounted for Cost to be accounted for: Factory Cost: Materials Labor Overhead In process, beginning Total cost accounted for Cost accounted for as follows: Finished and Transferred In Process, beginning cost last month cost this month Materials Labor Overhead Received, Finished and Transferred Total cost transferred out In Process, ending cost this department Materials Labor Overhead Total accounted for

3/4 100% 1/2 Total Cost

1500 29000 1500 32000 Unit Cost

P32000 16000 9600 P57600 19500 P77100 31000 units 2000 units P19500 1500 750 450 P22200 29000 units 52200 P74400 3000 units 1500 750 450 2700 P77100

32000 32000 32000

P1 0.5 0.3 1.8 P1.8

(1500x1) (1500x.5) (1500x.3)

(29000x.1.8) (31000@2.4 )

(1500x1) (1500x.5) (1500x.3)

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Note: 60% transferred to dept. 2 (18600 units @ 2.4) 40% transferred to dept. 3 (12400 units @ 2.4) Sulpicio Mfg. Co. Cost of Production Report for the month ended August 31, 2O12 Department 2 Quantity Schedule Actual In process, beginning Received from dept.1 units to be accounted for In process, beginning Received, Finished and Transferred In process, ending Normal Loss Abnormal Loss Units accounted for 5400 18600 24000 5400 12900 700 2000 3000 24000 Total Cost Cost to be accounted for: Factory Cost: Materials Labor Overhead In process, beginning Received from dept.1 adjustment for lost units Total cost to be accounted for Cost accounted for as follows: Finished and Transferred In Process, beginning cost last month 100% 100% 100% 12900 700 3000 16600 Materials Work EUP done Conversion Work EUP done

2/3 100% 1/7 2/3

3600 1290 0 100 2000 1860 0

Unit Cost

P20750 16600 8370 18600 5580 18600 P34700 6960 44640 18600 P86300

P1.25 0.45 0.3 2 2.4 0.289157* P4.689157

18300 units 5400 units 6960

cost this month Materials Labor Overhead Received, Finished and Transferred Total cost transferred out In Process, ending cost from dept.1 cost this department Materials Labor Overhead adjustment for lost units Abnormal loss: cost from dept.1 cost this department Materials Labor Overhead adjustment for lost units

12900 units 700 units

1620 1080 P9660 60490.1 P70150. 1

(18600x.45) (18600x.30) (12900x4.689157) (18300@8.833339)

1680 (700x2.4) 875 (700x1.25) 450 (100x.45) 30 (100x.30) 202.4 (700x.289157) P2832.4 7200 (3000x2.4) 3750 (3000x1.25) 900 (2000x.45) 600 (2000x.30) 867.5 (3000x.289157) P13317. 5 P86300

Total accounted for *Note: Adjustment in Department 2 (2000x2.4)

4800 16600 0.298915 7

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Sulpicio Mfg. Co. Cost of Production Report for the month ended August 31, 2O12 Department 3 Quantity Schedule Actual In process, beginning Received from dept.1 units to be accounted for In process, beginning Received, Finished and Transferred In process, ending Normal Loss Units accounted for 8OOO 124OO 2O4OO 8OOO 98OO 6OO 2OOO 2O4OO Work done EUP

3/4 1OO% 1/2

6OOO 98OO 3OO 161OO

Total Cost Cost to be accounted for: Factory Cost: Materials Labor Overhead In process, beginning Received from dept.1 adjustment for lost units Total cost to be accounted for Cost accounted for as follows: Finished and Transferred In Process, beginning cost last month cost this month Materials Labor Overhead adjustment for lost units Received, Finished and Transferred

Unit Cost

P2415O 161OO 12O75 161OO 7245 161OO P4347O 627O 2976O 124OO P795OO

1.5O O.75 O.45 2.7O 2.4O O.298137** P5.398137

178OO units 8OOOunits P627O 9OOO (6OOOX1.5O) 45OO (6OOOXO.75) 27OO (6OOOXO.45) 1789 (6OOOXO.298137) P24259 98OOunits 549O2 (98OOX5.398137)
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Total cost transferred out In Process, ending cost from dept.1 cost this department Materials Labor Overhead adjustment for lost units Total accounted for

P77161 (178OO@4.334887) 6OOunits P144O (6OOX2.4) 45O (3OOX1.5) 225 (3OOXO.75) 135 (3OOXO.45) 89 (3OOXO.298137) P2339 P795OO

**Note: Adjustment in Department 3 (2OOOx2.4) P48OO EUP 161OO PO.298137**

Sulpicio Mfg. Co. Cost of Production Report for the month ended August 31, 2O12 Department 4 Quantity Schedule In process, beginning Received from dept.1 units to be accounted for In process, beginning Received, Finished and Transferred In process, ending Normal Loss Units accounted for Actual 19OO 178OO 197OO 19OO 14OOO 18OO 2OOO 197OO Work done EUP

4/5 1OO% 1/4 1/2

152O 14OOO 45O 1OOO 1697O Unit Cost

Total Cost Cost to be accounted for: Factory Cost: Materials Labor Overhead

P11879 8485 6788 P27152

1697O 1697O 1697O

PO.7 O.5 O.4 P1.6

In process, beginning Received from dept.3 adjustment for lost units Total cost to be accounted for Cost accounted for as follows: Finished and Transferred In Process, beginning cost last month cost this month Materials Labor Overhead adjustment for lost units Received, Finished and Transferred Total cost transferred out In Process, ending cost from dept.3 cost this department Materials Labor Overhead adjustment for lost units Total accounted for **Note: Adjustment in Department 4 (2OOOx4.334887) P8669.774 2OOOX1 /2X1.6 16OO (19OO+14OOO+18OO)

3687 77161 P1O8OOO

178OO

4.334887 O.58O21322 P6.5151OO293

159OOunits 19OOunits P3687 1O64 (152OX.7) 76O (6OOOXO.75) 6O8 (152OX.5) 11O2.4 (19OOX.58O21322) P7221.4 98OOunits 6OOunits P78O2.8 (18OOX4.334887) 3215 (45OX.7) 225 (45OX.5) 18O (45OX.4) 1O44.4 (18OOX.58O21322) P9567.2 P1O8OOO 91211.4 (14OOOX6.5151OO293) P98432.8 (159OO@5.963472)

P1O269.774 177OO PO.58O21322

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Sulpicio Mfg. Co. Cost of Production Report for the month ended August 31, 2O12 Department 5 Quantity Schedule In process, beginning Received from dept.1 2O%INCREASE units to be accounted for In process, beginning Received, Finished and Transferred In process, ending Normal Loss Units accounted for Actual 2OOO 183OO 366O 2396O 2OOO 2126O 5OO 2OO 2396O Work done EUP

3/5 1OO% 1/5 1OO%

12OO 2126O 1OO 2OO 2276O Unit Cost

Total Cost Cost to be accounted for: Factory Cost: Materials Labor Overhead In process, beginning Received from dept.3 adjustment for lost units Total cost to be accounted for Cost accounted for as follows: Finished and Transferred In Process, beginning cost last month cost this month Materials Labor Overhead adjustment for lost units Received, Finished and Transferred

P4552O 2276O 182O8 2276O 4552 2276O P6828O 1569.9 7O15O.1 2196O 14OOOO

P2 O.8 O.2 P3.O 3.19448998 O.O58262674*** P6.247711672

2326Ounits 2OOOunits P1569.9 24OO 96O 24O 1O6.5 P5276.4 5OOunits 132826.4
Page | 18

Total cost transferred out In Process, ending cost from dept.4 cost this department Materials Labor Overhead adjustment for lost units Total accounted for

P1381O2.8 (2326O@5.937351677) 6OOunits P1597.2 (5OOX3.19444998) 2OO (1OOX2) 8O (1OOX.8) 2OO (1OOX.2)

P1897.2 P14OOOO

**Note: Adjustment in Department 5 (2OOx3.194448998) P638.8897996 2OOX3 6OO Trans Out

P1238.8898 2326O PO.O532674

Sulpicio Mfg. Co. Cost of Production Report for the month ended August 31, 2O12 Department 6 Quantity Schedule Original In process, August 1 [2952 /(1-(4%5x2)] Received from department 5 units to be accounted for In process, august 1, Finished and transferred Received, Finished and Transferred In process, august 31 [968 /(1-(4%5x4)] Units accounted for 3OOO 2326O 2626O 3OOO 2226O 1OOO 2626O 288O 2137O 8/25 3/4 1OO% 1/2 216O 2137O 484 24O14 Unit Cost Net Done Equivalent Production

Total Cost Cost to be accounted for: Factory Cost, August: Materials

P12OO7 24O14=

PO.5
Page | 19

Labor Overhead Work In process, beginning Received from dept.5 Total cost to be accounted for Cost accounted for as follows: Finished and Transferred In Process, beginning, finished cost last month cost this month Received, Finished and Transferred cost from preceding department cost this department Total cost transferred Work in process, ending cost from preceding department cost this department Total cost accounted for

84O4.9 24O14= O.35 6OO3.5 24O14= O.25 P26415.4 P1.1 5781.8 1381O2.8 2326O= 5.937351677 P17O3OO P7.O37351667

2425Ounits 288Ounits P5781.8 2376 (216OX1.1) P8157.8 2137Ounits P235O7 (2137OX1.1) 132165.4 (2226OX5.937351677) P155672.4 P16383O.2 (2425O@6.755884536) 968units P532.4 (484X1.1) 5937.4 (1OOOX5.937351677) P6469.8 P17O3OO

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Sulpicio Mfg. Co. Cost of Production Report for the month ended August 31, 2O12 Department 7 Quantity Schedule Actual In process, beginning Received from dept.4 25%INCREASE units to be accounted for In process, beginning Received, Finished and Transferred In process, ending Units accounted for 3125 159OO 3975 23OOO 3125 188OO 1O75 23OOO 100% 100% 188OO 1O75 19875 Materials Work EUP done Conversion Work done EUP

2/5 1OO% 3/5

125O 188OO 645 2O695

Total Cost Cost to be accounted for: Factory Cost: Materials Labor Overhead In process, beginning Received from dept.4 Total cost to be accounted for Cost accounted for as follows: Finished and Transferred In Process, beginning cost last month cost this month Materials Labor Overhead

Unit Cost

P11925 4139 4139 2O2O3 1692.2 98432.8 P12O328

19875= 2O695= 2O695=

PO.6O O.2O O.2O P1.OO 4.952594 P5.952594

19875=

21925units 3125units P1692.2

25O (125OX.2) 25O (125OX.2) P2192.2

Received, Finished and Transferred 188OOunits 1119O8.8 (188OOX5.952594) Total cost transferred out P1141O1 In Process, ending 1O75units
Page | 21

cost from dept.4 cost this department Materials Labor Overhead Total accounted for

P5324 (1O75X4.952594) 645 (1O75XO.6) 129 (645X.2) 129 (645X.2) P6227 P12O328

Problem 2: (AVERAGE Method) Given Data: Department 1: see Table 1.2 Department 2: comparative report A. Increase 3O%, Material Added at the start Normal loss during process B. Increase 3O%, Material Added at the start Normal loss, end of process Table 1.2 In Process, beginning Placed in process Received from department 1 In Process, ending Normal Loss Abnormal Loss Department 1 3OOO 3OOOO 2OOO 3 /5 Department 2 17OO 31OOO 2OOO 1OOO 5OO

3 /4 2 /5

Page | 22

SOLUTION NUMBER2: BALIBADO Mfg. Co. Cost of Production Report for the month ended August 31, 2O12 Department 1 Quantity Schedule In process, beginning Placed in Process units to be accounted for Finished and tarnsferred In process, ending Units accounted for Cost Analysis In process, beginning P5400 3800 2700 P11900 Cost Added Total this month Cost P42300 P47700 31800 12100 15900 31800 13200 15900 31800 P67600 P79500 Total cost accounted for Cost accounted for as follows: Finished and 31000 Transferred units In Process, ending 2000units cost this month Materials Labor Overhead Total COST accounted for Unit Cost P1.5 0.5 0.5 P2.5 Actual Work done 3000 30000 33000 31000 2000 33000 100% 2/5 31000 800 31800 EUP

Materials Labor Overhead

1200 (800X1.5) 400 (800X0.5) 400 (800X0.5) P2000 P79500

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BALIBADO Mfg. Co. Cost of Production Report for the month ended August 31, 2O12 Department 2A Material Conversion Work Work EUP EUP done done

Quantity Schedule: Actual In process, beginning Placed in Process 30% Incease in units units to be accounted for Received, Finished and tarnsferred In process, ending normal loss Abnormal Loss Units accounted for P1700 31000 9300 42000 38500 2000 1000 500 P42000

100% 100% 100%

P38500 2000 500 P41000 Total Cost

100% 1/4 2/5

38500 500 200 P39200

Units Cost to be accounted for: cost from department 1 in process,beg. received this month increase in units

Unit Cost

1700 31000 93000 42000

P6500 77500 P84000

P3.8235 2.5 P2

cost this department Materials Labor Overhead adjustment for lost units

In Cost process, Added beginning this month P4500 P69300 3850 47110 8250 50550 P16600 P166960

Total Cost P73800 41000 50960 39200 58800 39200 P183560

Unit Cost P1.8 1.3 1.5 P4.6 P6.6 0.04878

Total cost to accounted for cost accounted for as follows: Received, Finished and Transferred In Process, ending cost from dept.1 cost this department Materials Labor Overhead Abnormal loss: cost from dept.1 cost this department Materials Labor Overhead Total accounted for

P267560

P6.648780

38500unit s 2000units

P255978 (38500X6.648780) (2000X2.048780487 P4098 )

3600 (2000X1.8) 650 (500X1.3) 750 (500X1.5) P9098 500units P1024 (500X2.048780487)

900 (500x1.8) 200 (2000x1.3) 300 (200x1.5) P2484 P267560

Page | 25

BALIBADO Mfg. Co. Cost of Production Report for the month ended August 31, 2O12 Department 2B Material Conversion Work Work done EUP EUP done

Quantity Schedule: Actual In process, beginning Placed in Process 30% Incease in units units to be accounted for Received, Finished and tarnsferred In process, ending normal loss Abnormal Loss Units accounted for P1700 31000 9300 42000 38500 2000 1000 500 P42000

100% 100% 100% 100%

P38500 2000 1000 500 P42000

100% 1/4 100% 2/5

38500 500 1000 200 P40200

Units Cost to be accounted for: cost from department 1 in process,beg. received this month increase in units

Total Cost

Unit Cost

1700 31000 93000 42000

P6500 77500 P84000

P3.8235 2.5 P2

cost this department Materials Labor Overhead adjustment for lost units Total cost to accounted

In process, beginning P4500 3850 8250 P16600

Cost Added this Total month Cost P69300 P73800 42000 47110 50960 40200 50550 58800 40200 P166960 P183560

Unit Cost P1.757143 1.267662 1.462686 P4.487491 P6.487491 0.168506 P6.655997

P267500

for cost accounted for as follows: Received, Finished and Transferred In Process, ending cost from dept.1 cost this department Materials Labor Overhead Abnormal loss: cost from dept.1 cost this department Materials Labor Overhead Total accounted for

38500units 2000units

P256256 (38500X6.6655997) P4000 (2000X2)

3514 (2000X1.757143) 634 (500X1.267662) 731 (500X1.462686) P8879 500units P1000 (500X2) 879 (500x1.757143) 253 (2000x1.267662) 293 (200x1.462686) P2425 P267560

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