Name: Date: September 2017

Cost Accounting Tutorial

4rd Meeting – Process Costing (Chapter 17)
Teaching Assistant Team

PROBLEM 1
a. Describe two cost categories of process costing!
b. Describe five-step of process costing!
c. What are the differences of weighted-average and FIFO methods of process costing?

PROBLEM 2

Souvenir corp is a manufacturer of birthday souvenir. It has assembly department and

finishing department. This exercise focuses on the finishing department. Direct materials are
added when product reach 60% of completion. Conversion cost are added evenly during the
process. Souvenir Corp uses FIFO method of process costing. The following information for
August 2017 is available.

Physical Direct Conversion

Units Materials Costs
1. Work in process, beginning inventory 1.000 - $ 15.000
(August 1)
2. Started during August 2017 3.500
3. Completed during August 2017 3.000
4. Total cost added during August 2017 $ 100.000 $ 50.000

*Note : - Degree of completion in beginning WIP : 40%

- Degree of completion in WIP, August : 55%

1. For each cost category, compute equivalent units in the finishing department. Show
physical units in the first column of your schedule.
2. For each cost category, summarize total finishing department costs for August 2017 and
calculate the cost per equivalent unit.
3. Assign costs to units completed and and transferred out and to units in ending work in
process.

PROBLEM 3
Larsen Company manufactures car seats in its San Antonio plant. Each car seat passes
through assembly department and the testing department. This problem focuses on the
assembly department. The process-costing system at Larsen Company has a single direct cost
category (direct materials) and single indirect-cost category (conversion cost). Direct
materials are added at the beginning of the process. Conversion costs are added evenly during
the process. When the assembly department finishes work on each car seat, it is immediately
transferred to testing.

Larsen Company uses the weighted-average method of process costing. Data for the
assembly department for October 2014 are as follows:

Physical Direct Conversion

Units (car Materials Costs
seats)
Work in process, October 1a 5,000 $1,250,000 $ 402,750
Started during October 2014 20,000
Completed during October 2014 22,500
Work in process, October 31b 2,500
Total cost added during October 2014 $ 4.500.000 $ 2.337.500
a
Degree of completion: direct materials,?%; conversion costs, 60%.
b
Degree of completion : direct materials,?%; conversion costs, 70%

a. For each cost category, compute equivalent units in the assembly department. Show
physical units in the first column of your schedule.
b. For each cost category, summarize total assembly department costs for October 2014 and
calculate the cost per equivalent unit.
c. Assign costs to units completed and and transferred out and to units in ending work in
process.
d. Prepare the necessary journals needed to record transaction during the month of October
2014

HOMEWORK

Jualan Baju Company is a manufacturer for summer clothes. In the finishing department,
direct materials are added when product reach 20% of completion. Conversion costs are
added evenly during the process. The following information for June 2017 is available.

Physical Direct Conversion

Units Materials Costs
Work in process, beginning inventory 2.000 $ 150.000 $ 70.000
(70%)
Started during June 2017 4.000
Completed during June 2017 5.000
Total cost added during June 2017 $ 250.000 $ 180.000
At the end of the month, work in process is at 30% of completion. Please help Jualan Baju
Company to make this following tasks in weighted average and FIFO method:

1. Calculate equivalent units of transferred-in costs, direct materials, and conversion cost.
2. Summarize total costs to account for
3. Assign total costs to units completed and to units in ending work in process.