TARLAC STATE UNIVERSITY- COLLEGE OF BUSINESS AND ACCOUNTANCY

COST ACCOUNTING AND COST MANAGEMENT

PROCESS COSTING: WEIGHTED AVERAGE METHOD

Short Problem#1: No Lost Units, Pure EUP

The following data are for four independent process-costing departments. Inputs are added
continuously.
A B C D
Beginning inventory 3,000 2,000 — 25,000
Percent completion 30% 75% — 60%
Units started 19,000 20,000 48,000 35,000
Ending inventory 4,000 — 8,000 10,000
Percent completion 20% — 25% 10%

Compute the equivalent units of production for each of the preceding departments using the weighted
average method.

Short Problem#2: EUP- Weighted Average vs. FIFO

BONUS Company manufactures a product that passes through two processes: fabrication and assembly.
The following information was obtained for the fabrication department for June:
a. All materials are added at the beginning of the process.
b. Beginning work in process had 60,000 units, 30 percent complete with respect to conversion
costs.
c. Ending work in process had 12,000 units, 25 percent complete with respect to conversion costs.
d. Started in process, 75,000 units.

Required:
1. Compute for the EUP of materials and conversion costs using the weighted average method.
2. Compute for the EUP of materials and conversion costs using the FIFO method.

Short Problem #3: Uneven Application of Cost- Weighted Average Method

The Cost Department of EASY Corporation operates a process cost system using the weighted average
method. Production records showed the following data for one of the three production departments:

Product received from previous department 100, 000 kilos

Product finished and sent to next department 76, 000 kilos
Product unfinished in this department 24, 000 kilos

In this department, additional material is added to the work received from the preceding department.
Three distinctly different types of materials are used at three separate stages production in this
department:

Material A is added at the start of the process.

Material B is added when the process is one-fourth completed.
Material C is added when the process is three-fourths completed.

Labor and factory overhead are incurred at a uniform rate throughout the manufacturing process in this
department. Examination of the unfinished work discloses that:

¼ was 7/8 completed ½ was ½ completed ¼ was 1/6 completed

Compute for the following:

EUP for Material A, Material B, Material C and Conversion Costs

 TARLAC STATE UNIVERSITY- COLLEGE OF BUSINESS AND ACCOUNTANCY
COST ACCOUNTING AND COST MANAGEMENT
PROCESS COSTING: WEIGHTED AVERAGE METHOD
Short Probelem#4: With Lost Units, Pure EUP

Work-in-Process, beg. (50% completed) 20, 000

Received from prior department 200, 000
Finished and transferred 190, 000
Work-in-Process, end (60% completed) 20, 000
Lost Units 10, 000

Compute for the EUP for Cost from prior department, Materials, and Conversion costs if:
1. Materials and conversion costs are added evenly in the production. All lost units are normal.
2. Materials are added in the start of the process. All lost units are normal.
3. Materials are added in the end of the process. All lost are normal.
4. Materials are added at the start of the process. Lost Units are encountered during the process.
Normal lost is 4, 000 units, 6, 000 abnormal
5. Materials are added at 70% completion. Normal lost is 4, 000 units, 6, 000 abnormal. Inspection
point at the end of the process.
6. Materials are added at 40% completion. Normal lost is 4, 000 units, 6, 000 abnormal. Inspection
point is at 70% completion stage.

Long Problem #1: No Lost Units Accounted, Single Department

EASY Company produces a product that passes through two departments: mixing and cooking. Both
departments use the weighted average method. In the mixing department, all direct materials are
added at the beginning of the process. All other manufacturing inputs are added uniformly. The
following information pertains to the mixing department for February:

a. Beginning work in process (BWIP), February 1: 100,000 pounds, 100 percent complete with respect
to direct materials and 40 percent complete with respect to conversion costs. The costs assigned to
this work are as follows:
Direct materials $20,000 Direct labor 10,000 Overhead 30,000

b. Ending work in process (EWIP), February 28: 50,000 pounds, 100 percent complete with respect to
direct materials and 60 percent complete with respect to conversion costs.

c. Units completed and transferred out: 370,000 pounds. The following costs were added during the
month:
Direct materials $211,000 Direct labor 100,000 Overhead 270,000

Compute for the following:

1. Equivalent Units of Production for Materials and Conversion Costs
2. Costs of the completed units
3. Costs of the work-in-Process ending

Problem #2: Multiple Departments, No Lost Units Accounted

AVERAGE Company uses a process-costing system. The company manufactures a product that is
processed in two departments: molding and assembly. In the molding department, direct materials are
added at the beginning of the process; in the assembly department, additional direct materials are
added at the end of the process. In both departments, conversion costs are incurred uniformly
throughout the process. As work is completed, it is transferred out. The following table summarizes the
production activity and costs for February:
Molding Assembly
Beginning inventories:
Physical units 10,000 8,000
Costs:
 TARLAC STATE UNIVERSITY- COLLEGE OF BUSINESS AND ACCOUNTANCY
COST ACCOUNTING AND COST MANAGEMENT
PROCESS COSTING: WEIGHTED AVERAGE METHOD
Transferred in — 45,200
Direct materials 22,000 —
Conversion costs 13,800 16,800

Current production:
Units started 25,000 ?
Units transferred out 30,000 35,000
Costs:
Transferred in — ?
Direct materials 56,250 39,550
Conversion costs 103,500 136,500
Percentage of completion:
Beginning inventory 40% 50%
Ending inventory 80% 50%

Compute for the following:

1. Equivalent Units of production for Transferred in Costs, Materials and Conversion costs
2. Cost of the completed units for both departments.
3. Cost of the work-in-process ending in both departments.

Problem #3: Multiple Departments with Lost Units:

DIFFICULT Company produces an industrial chemical used for cleaning and lubricating machinery. In the
mixing department, liquid and dry chemicals are blended to form slurry. Output is measured in gallons.
In the baking department, the slurry is subjected to high heat, and the residue appears in irregular
lumps. Output is measured in pounds. In the grinding department, the irregular lumps are ground into a
powder, and this powder is placed in 50-pound bags. Output is measured in bags produced. In April, the
company reported the following data:

A. The mixing department transferred 50,000 gallons to the baking department, costing $250,000.
Each gallon of slurry weighs two pounds.

B. The baking department transferred 100,000 pounds (irregular lumps) to the grinding
department. At the beginning of the month, there were 5,000 gallons of slurry in process, 25
percent complete, costing $30,000 (transferred-in cost of $25,000 plus conversion cost of
$5,000). No additional direct materials are added in the baking department. At the end of April,
there was no ending work in process. Conversion costs for the month totaled $205,000. Normal
loss during baking is 5 percent of good output. All transferred-in materials are lost, but only 50
percent of the conversion units are assumed to be lost.

C. The grinding department transferred 2,500 bags of chemicals to its finished goods warehouse.
Beginning work in process for this department was 25,000 pounds, 40 percent complete with
the following costs: transferred-in cost, $132,500 and conversion cost, $15,000. Bags are used at
the end of the process and cost $1.50 each. Conversion costs for the month’s production are
$172,500. There is no ending work in process.

D. The company is using the Weighted Average Method of Accounting for all of its departments.

E. In presenting the production report the “department’s unit-output measurement” is

presented for EUP and costing purposes.

Compute for the following: (METHOD OF NEGLECT-NOT APPLICABLE. USE ALLOWANCE/ADJUSTMENT

METHOD ONLY)

PREPARE FOR THE COST OF PRODUCTION REPORT FOR THE CURRENT PERIOD