Process Costing Examples (matz Uzry)
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Matz, Chapter # 7, Exercise # 7, Page # 167 Weighted Average Method Data: 1 5,000 units in process at start, ( Labour 500, FOH 50 ) 2 70,000 units received from preceding department at 2.641 per unit 3 Cost incurred during period: Labour 14,200 FOH 3,450 4 5 6 7
68,000 units completed during period 60,000 units transferred to next department 8,000 units finished & in hand at the end of the period 4,000 units in process at end & 50% completed/ converted Cost of normal loss is to be absorbed by all finish & unfinish production Solution :
Units Balance b/f Received
Process account Cost
Rate 5,000 70,000
13,680 Transferred 2.64
Cost incurred: Material Labour FOH 75,000
184,870 On Hand
Units 60,000 8,000
Lost
3,000
14,200 Balance c/d 3,450
4,000
216,200
75,000
Calculation of Equivalent Production Units: Conversion Units completed and transferred out Add: Units on Hand (completed) Add: Work in process (at end) ( 4,000 units x 50 % ) EPU
Calculation of per unit cost:
60,000 8,000 2,000 70,000
Per unit cost from Dep 1: Units received from previous dept Cost incured on Work in process (at start) TOTAL Labour cost incurred: On work in process at start During current period Total material FOH cost incurred: On work in process at start During current period Total Conversion
Cost
Units (EPU)
Rate
184,870 13,130 198,000
70,000 5,000 75,000
2.64
500 14,200 14,700
70,000
0.21
50 3,450 3,500
70,000
0.05
TOTAL PER UNIT COST
2.90
Cost of Normal Loss : ( we assume that inspection take place in start of process ) 3,000 units lost (normal)
( 3,000 units x 2.64 )
7,920 72,000
=
7920
0.11 ( per unit cost contribution to good units )
Cost of Work in Process (at end) Preceding dep cost Labour cost FOH Share of Normal loss
(4,000 units x 2.64) (4,000 units x 1/2 x 0.21) (4,000 units x 1/2 x 0.05) (4,000 units x 0.11) Cost of Work in Process (at end)
10,560 420 100 440 11,520
Cost of units transferred to next department: ( 60,000 units x 2.90 ) Add: Share of Normal Loss ( 60,000 units x 0.11 ) Total Cost of 60,000 units completed
174,000 6,600 180,600
Cost of Finish goods on hand at end: ( 8,000 units x 2.90 )
23,200
Add: Share of Normal Loss ( 8,000 units x 0.11 ) Total Cost of 8,000 units completed
880 24,080
Rate
Cost 3.01
180,600
3.01
24,080 11,520
216,200
bution to good units )
Chapter # 7, Exercise # 8, Page # 167 FIFO Method Data: 1 2 3 4
12,400 units transferred to next department 500 units lost 800 units in process at end, 1/4th completed 2,400 units in process at start, Cost 6,656, 3/4th completed
5 Cost incurred during period: Material 5,886 Labour 7,830 FOH 1,134 6 Cost received from preceding department 23,797.80 Solution : Unit received from preceding department
Units
Units transferred Units Lost Units in Ending process Total units in process Less: beginning process units Units received from preceding department
Units Balance b/f Received
Rate
2,400 11,300
Cost incurred: Material Labour FOH
12,400 500 800 13,700 (2,400) 11,300
Process Account Cost 6,656 Transferred
2.11
23797.80 Lost Balance c/d
Units 12,400 500 800
5,886 7,830 1,134 13,700
Calculation of Equivalent Production Units:
45,304
13,700
Material Units completed and transferred out Less: Work in Process (at start) Units started and completed during the period Add: Work in process (at start) - work this period Add: Work in process (at end) - work this period EPU
Conversion
12,400 (2,400) 10,000 600 200 10,800
12,400 (2,400) 10,000 600 200 10,800
Units 11,300 10,800 10,800 10,800
Rate 2.1060 0.5450 0.7250 0.1050
Calculation of per unit cost: Cost 23797.8 5,886 7,830 1,134
Cost received from preceding dep Material cost incurred Labour cost incurred FOH cost incurred PER UNIT COST Add: Adjustment for lost units Total Unit Cost
3.48 0.1 3.58
Cost of Normal Loss : ( we assume that inspection take place in start of process ) Cost of Normal loss
( 500 units x 2.1060 )
1,053 11,300 - 500
=
1053
0.0975 (per unit cost contibution to good units)
Cost of Work in Process (at end) Preceding dep cost Material cost Labour cost FOH
( 800 units x {2.1060 + 0.0975} ) (800 units x 1/4 x 0.5450) (800 units x 1/4 x 0.7250) (800 units x 1/4 x 0.1050)
1762.8 109 145 21
Cost of Work in Process (at end)
2037.8
Cost of Finished goods: a) From beginning inventory (2,400 units) Cost incured till start add: Further cost incurred to complete 100%: Material (2,400 units x 1/4 x 0.5450) Labour (2,400 units x 1/4 x 0.7250)
6,656 327 435
FOH
(2,400 units x 1/4 x 0.1050)
63
Total cost of 2,400 units (completed) b) From Current Production (10,000 units) Cost incurred ( 10,000 units x 3.5785 ) COST OF FINISHED GOODS
825
Rate
Cost 3.4892
43,266
2037.8 -
45,304
Conversion
( 2,400 units x 3/4th ) ( 800 units x 1/4 th )
bution to good units)
7,481
35,785 43,266
Chapter # 7, Problem # 7-2, Page # 169
Process Account ( Department 1 ) Rate Cost Units
Units Balance b/f Input
3,000
2,647 Transferred
61,000
-
Cost incurred: Material Labour FOH 64,000
50,000
On Hand
5,000
Lost
1,000
12,481 16,273 Balance c/d 18,409
8,000
49,810
64,000
Calculation of Equivalent Production Units: Material Units completed and transferred out Add: Units on Hand (completed) Add: Work in process (at end)
50,000 5,000 8,000 63,000
EPU
Calculation of per unit cost:
Material cost incurred: On work in process at start During current period TOTAL
Cost
Units (EPU)
Rate
749 12,481 13,230
63,000
0.21
Labour cost incurred: On work in process at start During current period Total material
837 16,273 17,110
FOH cost incurred: On work in process at start During current period
1,061 18,409
59,000
0.29
Total Conversion
19,470
59,000
0.33
TOTAL PER UNIT COST
0.83
Cost of Work in Process (at end) Material cost Labour cost FOH
(8,000 units x 100% x 0.21) (8,000 units x 50% x 0.29) (8,000 units x 50% x 0.33)
1,680 1,160 1,320
Cost of Work in Process (at end)
4,160
Cost of units transferred to next department: Total Cost of 60,000 units completed: ( 50,000 units x 0.83 )
41,500 41,500
Cost of Finish goods in hand at end: Total Cost of 8,000 units completed ( 5,000 units x 0.83 )
Process Account ( Department 2 ) Rate Cost Units
Units Balance b/f Received
4,150 4,150
2,000 50,000
Cost incurred: Material Labour FOH 52,000
2,564 Transferred 0.83
45,000
41,500 Lost
2,000
3,092 Balance c/d 4,045 4,579
5,000
55,780
52,000
Calculation of Equivalent Production Units: Material Units completed and transferred out Add: Work in process (at end)
45,000 5,000 50,000
EPU
Calculation of per unit cost:
Per unit cost from Dep 1: Units received from previous dept Cost incured on Work in process (at start) TOTAL Material cost incurred: On work in process at start During current period TOTAL
Cost
Units (EPU)
Rate
41,500 1,600 43,100
50,000 2,000 52,000
0.829
158 3,092 3,250
50,000
0.07
Labour cost incurred: On work in process at start During current period Total material
325 4,045 4,370
46,000
0.1
FOH cost incurred: On work in process at start During current period Total Conversion
481 4,579 5,060
46,000
0.11
Per unit cost Adjustment for lost unit Total Per Unit Cost
1.099 0.033 1.132
Cost of Normal Loss : ( we assume that inspection take place in start of process ) Cost of Normal loss
( 2,000 units x 0.83 )
1,660 45,000 + 5000
=
1,660 0.033 (per unit cost contibution to good units)
Cost of Work in Process (at end) Preceding dep cost Material cost Labour cost FOH
( 5,000 units x {0.033 + 0.829} ) (5,000 units x 100% x 0.065) (5,000 units x 20% x 0.095) (5,000 units x 20% x 0.11)
4,310 325 95 110
Cost of Work in Process (at end)
4,840
Cost of units transferred to next department: Total Cost of 45,000 units completed: ( 45,000 units x 1.132 )
Process Account ( Department 3 ) Rate Cost Units
Units Balance b/f
50,940 50,940
2,000
Additional Input
15,000
Received
45,000
17,145 Transferred
1.13
Cost incurred: Material Labour FOH
50,940 Lost
55,000
1,000
Balance c/d
6,000
8,400 15,236 22,854 62,000
114,575
62,000
Calculation of Equivalent Production Units: Material Units completed and transferred out Less: Work in Process (at start) Units started and completed during the period Add: Work in process (at start) - work this period Add: Work in process (at end) - work this period Add: Unit Lost
55,000 (2,000) 53,000 6,000 1,000
Conversion 55,000 (2,000) 53,000 1,600 3,000 1,000
EPU
60,000
58,600
Units 45,000 60,000 58,600 58,600
Rate 1.13 0.14 0.26 0.39
Calculation of per unit cost: Cost 50,940 8,400 15,236 22,854
Cost received from preceding dep Material cost incurred Labour cost incurred FOH cost incurred Unit Cost Adjusted unit cost transferred in Total Unit Cost
0.79 0.85 1.64
Adjustment for unit cost of preceding department: 50940 45000 + 15000
=
0.85
Cost of Work in Process (at end) Preceding Dep cost Material cost Labour cost FOH
( 6,000 units x 0.849 ) (6,000 units x 100% x 0.14) (6,000 units x 50% x 0.26) (6,000 units x 50% x 0.39)
5094 840 780 1170
Cost of Work in Process (at end)
7884
Cost of Finished goods: a) From beginning inventory (2,000 units) Cost incured till start add: Further cost incurred to complete 100%: Material (2,000 units x 0% x 0.14) Labour (2,000 units x 80% x 0.26) FOH (2,000 units x 80% x 0.39)
17,145 -
Total cost of 2,000 units (completed) b) From Current Production (53,000 units) Cost incurred ( 53,000 units x 1.639 ) Total Cost of 55,000 units
416 624
1,040
Add: Share of Normal Loss: Cost of 1,000 units lost Total Cost of Finish Goods
( 1,000 x 100% x 1.639 )
Rate
Cost 0.83
41,500
0.83
4,150 4,160
49,810
Conversion 50,000 5,000 4,000 59,000
Rate
Cost 1.132
50,940
4,840
55,780
Conversion 45,000 1,000 46,000
ibution to good units)
Rate
Cost 1.940
106,691
7884 -
114,575
( 2,000 units x 80% ) ( 6,000 units x 50% )
18,185
86,867 105,052
1639 106,691
68,000 units completed during period 60,000 units transferred to next department 8,000 units finished & in hand at the end of the period 4,000 units in process at end & 50% completed/ converted Cost of normal loss is to be absorbed by all finish & unfinish production Solution :
Units Balance b/f Received
Process account Cost
Rate 5,000 70,000
13,680 Transferred 2.64
Cost incurred: Material Labour FOH 75,000
184,870 On Hand
Units 60,000 8,000
Lost
3,000
14,200 Balance c/d 3,450
4,000
216,200
75,000
Calculation of Equivalent Production Units: Conversion Units completed and transferred out Add: Units on Hand (completed) Add: Work in process (at end) ( 4,000 units x 50 % ) EPU
Calculation of per unit cost:
60,000 8,000 2,000 70,000
Per unit cost from Dep 1: Units received from previous dept Cost incured on Work in process (at start) TOTAL Labour cost incurred: On work in process at start During current period Total material FOH cost incurred: On work in process at start During current period Total Conversion
Cost
Units (EPU)
Rate
184,870 13,130 198,000
70,000 5,000 75,000
2.64
500 14,200 14,700
70,000
0.21
50 3,450 3,500
70,000
0.05
TOTAL PER UNIT COST
2.90
Cost of Normal Loss : ( we assume that inspection take place in start of process ) 3,000 units lost (normal)
( 3,000 units x 2.64 )
7,920 72,000
=
7920
0.11 ( per unit cost contribution to good units )
Cost of Work in Process (at end) Preceding dep cost Labour cost FOH Share of Normal loss
(4,000 units x 2.64) (4,000 units x 1/2 x 0.21) (4,000 units x 1/2 x 0.05) (4,000 units x 0.11) Cost of Work in Process (at end)
10,560 420 100 440 11,520
Cost of units transferred to next department: ( 60,000 units x 2.90 ) Add: Share of Normal Loss ( 60,000 units x 0.11 ) Total Cost of 60,000 units completed
174,000 6,600 180,600
Cost of Finish goods on hand at end: ( 8,000 units x 2.90 )
23,200
Add: Share of Normal Loss ( 8,000 units x 0.11 ) Total Cost of 8,000 units completed
880 24,080
Rate
Cost 3.01
180,600
3.01
24,080 11,520
216,200
bution to good units )
Chapter # 7, Exercise # 8, Page # 167 FIFO Method Data: 1 2 3 4
12,400 units transferred to next department 500 units lost 800 units in process at end, 1/4th completed 2,400 units in process at start, Cost 6,656, 3/4th completed
5 Cost incurred during period: Material 5,886 Labour 7,830 FOH 1,134 6 Cost received from preceding department 23,797.80 Solution : Unit received from preceding department
Units
Units transferred Units Lost Units in Ending process Total units in process Less: beginning process units Units received from preceding department
Units Balance b/f Received
Rate
2,400 11,300
Cost incurred: Material Labour FOH
12,400 500 800 13,700 (2,400) 11,300
Process Account Cost 6,656 Transferred
2.11
23797.80 Lost Balance c/d
Units 12,400 500 800
5,886 7,830 1,134 13,700
Calculation of Equivalent Production Units:
45,304
13,700
Material Units completed and transferred out Less: Work in Process (at start) Units started and completed during the period Add: Work in process (at start) - work this period Add: Work in process (at end) - work this period EPU
Conversion
12,400 (2,400) 10,000 600 200 10,800
12,400 (2,400) 10,000 600 200 10,800
Units 11,300 10,800 10,800 10,800
Rate 2.1060 0.5450 0.7250 0.1050
Calculation of per unit cost: Cost 23797.8 5,886 7,830 1,134
Cost received from preceding dep Material cost incurred Labour cost incurred FOH cost incurred PER UNIT COST Add: Adjustment for lost units Total Unit Cost
3.48 0.1 3.58
Cost of Normal Loss : ( we assume that inspection take place in start of process ) Cost of Normal loss
( 500 units x 2.1060 )
1,053 11,300 - 500
=
1053
0.0975 (per unit cost contibution to good units)
Cost of Work in Process (at end) Preceding dep cost Material cost Labour cost FOH
( 800 units x {2.1060 + 0.0975} ) (800 units x 1/4 x 0.5450) (800 units x 1/4 x 0.7250) (800 units x 1/4 x 0.1050)
1762.8 109 145 21
Cost of Work in Process (at end)
2037.8
Cost of Finished goods: a) From beginning inventory (2,400 units) Cost incured till start add: Further cost incurred to complete 100%: Material (2,400 units x 1/4 x 0.5450) Labour (2,400 units x 1/4 x 0.7250)
6,656 327 435
FOH
(2,400 units x 1/4 x 0.1050)
63
Total cost of 2,400 units (completed) b) From Current Production (10,000 units) Cost incurred ( 10,000 units x 3.5785 ) COST OF FINISHED GOODS
825
Rate
Cost 3.4892
43,266
2037.8 -
45,304
Conversion
( 2,400 units x 3/4th ) ( 800 units x 1/4 th )
bution to good units)
7,481
35,785 43,266
Chapter # 7, Problem # 7-2, Page # 169
Process Account ( Department 1 ) Rate Cost Units
Units Balance b/f Input
3,000
2,647 Transferred
61,000
-
Cost incurred: Material Labour FOH 64,000
50,000
On Hand
5,000
Lost
1,000
12,481 16,273 Balance c/d 18,409
8,000
49,810
64,000
Calculation of Equivalent Production Units: Material Units completed and transferred out Add: Units on Hand (completed) Add: Work in process (at end)
50,000 5,000 8,000 63,000
EPU
Calculation of per unit cost:
Material cost incurred: On work in process at start During current period TOTAL
Cost
Units (EPU)
Rate
749 12,481 13,230
63,000
0.21
Labour cost incurred: On work in process at start During current period Total material
837 16,273 17,110
FOH cost incurred: On work in process at start During current period
1,061 18,409
59,000
0.29
Total Conversion
19,470
59,000
0.33
TOTAL PER UNIT COST
0.83
Cost of Work in Process (at end) Material cost Labour cost FOH
(8,000 units x 100% x 0.21) (8,000 units x 50% x 0.29) (8,000 units x 50% x 0.33)
1,680 1,160 1,320
Cost of Work in Process (at end)
4,160
Cost of units transferred to next department: Total Cost of 60,000 units completed: ( 50,000 units x 0.83 )
41,500 41,500
Cost of Finish goods in hand at end: Total Cost of 8,000 units completed ( 5,000 units x 0.83 )
Process Account ( Department 2 ) Rate Cost Units
Units Balance b/f Received
4,150 4,150
2,000 50,000
Cost incurred: Material Labour FOH 52,000
2,564 Transferred 0.83
45,000
41,500 Lost
2,000
3,092 Balance c/d 4,045 4,579
5,000
55,780
52,000
Calculation of Equivalent Production Units: Material Units completed and transferred out Add: Work in process (at end)
45,000 5,000 50,000
EPU
Calculation of per unit cost:
Per unit cost from Dep 1: Units received from previous dept Cost incured on Work in process (at start) TOTAL Material cost incurred: On work in process at start During current period TOTAL
Cost
Units (EPU)
Rate
41,500 1,600 43,100
50,000 2,000 52,000
0.829
158 3,092 3,250
50,000
0.07
Labour cost incurred: On work in process at start During current period Total material
325 4,045 4,370
46,000
0.1
FOH cost incurred: On work in process at start During current period Total Conversion
481 4,579 5,060
46,000
0.11
Per unit cost Adjustment for lost unit Total Per Unit Cost
1.099 0.033 1.132
Cost of Normal Loss : ( we assume that inspection take place in start of process ) Cost of Normal loss
( 2,000 units x 0.83 )
1,660 45,000 + 5000
=
1,660 0.033 (per unit cost contibution to good units)
Cost of Work in Process (at end) Preceding dep cost Material cost Labour cost FOH
( 5,000 units x {0.033 + 0.829} ) (5,000 units x 100% x 0.065) (5,000 units x 20% x 0.095) (5,000 units x 20% x 0.11)
4,310 325 95 110
Cost of Work in Process (at end)
4,840
Cost of units transferred to next department: Total Cost of 45,000 units completed: ( 45,000 units x 1.132 )
Process Account ( Department 3 ) Rate Cost Units
Units Balance b/f
50,940 50,940
2,000
Additional Input
15,000
Received
45,000
17,145 Transferred
1.13
Cost incurred: Material Labour FOH
50,940 Lost
55,000
1,000
Balance c/d
6,000
8,400 15,236 22,854 62,000
114,575
62,000
Calculation of Equivalent Production Units: Material Units completed and transferred out Less: Work in Process (at start) Units started and completed during the period Add: Work in process (at start) - work this period Add: Work in process (at end) - work this period Add: Unit Lost
55,000 (2,000) 53,000 6,000 1,000
Conversion 55,000 (2,000) 53,000 1,600 3,000 1,000
EPU
60,000
58,600
Units 45,000 60,000 58,600 58,600
Rate 1.13 0.14 0.26 0.39
Calculation of per unit cost: Cost 50,940 8,400 15,236 22,854
Cost received from preceding dep Material cost incurred Labour cost incurred FOH cost incurred Unit Cost Adjusted unit cost transferred in Total Unit Cost
0.79 0.85 1.64
Adjustment for unit cost of preceding department: 50940 45000 + 15000
=
0.85
Cost of Work in Process (at end) Preceding Dep cost Material cost Labour cost FOH
( 6,000 units x 0.849 ) (6,000 units x 100% x 0.14) (6,000 units x 50% x 0.26) (6,000 units x 50% x 0.39)
5094 840 780 1170
Cost of Work in Process (at end)
7884
Cost of Finished goods: a) From beginning inventory (2,000 units) Cost incured till start add: Further cost incurred to complete 100%: Material (2,000 units x 0% x 0.14) Labour (2,000 units x 80% x 0.26) FOH (2,000 units x 80% x 0.39)
17,145 -
Total cost of 2,000 units (completed) b) From Current Production (53,000 units) Cost incurred ( 53,000 units x 1.639 ) Total Cost of 55,000 units
416 624
1,040
Add: Share of Normal Loss: Cost of 1,000 units lost Total Cost of Finish Goods
( 1,000 x 100% x 1.639 )
Rate
Cost 0.83
41,500
0.83
4,150 4,160
49,810
Conversion 50,000 5,000 4,000 59,000
Rate
Cost 1.132
50,940
4,840
55,780
Conversion 45,000 1,000 46,000
ibution to good units)
Rate
Cost 1.940
106,691
7884 -
114,575
( 2,000 units x 80% ) ( 6,000 units x 50% )
18,185
86,867 105,052
1639 106,691
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