PROCESS COSTING (DIFFICULT)
Problem 1
Janny Dipapahuli Corp. had products that undergo two departments, Assembly and Packaging departments.
The company employed process costing system to record the costs of the products. It was the policy also to
use FIFO in the Assembly and Weighted Average in the Packaging. The following were the data for the two
departments:
Assembly Units
Beginning inventory (70% complete as to conversion) 5,000
Started during the year 20,000
Ending inventory (80% complete as to conversion) 6,000
Cost
Beginning inventory
Direct material P12,500
Conversion P11,600
Cost added during the year
Direct material P46,420
Conversion P71,050
For the assembly department, the following were the policy as to direct materials:
30% of the beginning inventory were added at the start and the remaining were added when the
conversion was 80% complete
60% of the ending inventory were added when the conversion was 70% complete and the remaining
were added at the end
Packaging Units
Beginning inventory (50% complete as to conversion) 10,000
Started during the year ?
Ending inventory (75% complete as to conversion) 8,000
Cost
Beginning inventory
Transferred-in P4,950
Direct material P10,500
Conversion P1,000
Cost added during the year
Transferred-in ?
Direct material P63,000
Conversion P80,000
For the packaging department, the following were the policy as to direct materials:
40% of the beginning inventory were added when the conversion was 40% complete and the remaining
were added when the conversion was 50% complete
10% of the ending inventory were added when the conversion was 85% complete and the remaining
were added at the end
1. What is the cost of goods transferred-out from the Assembly department?
A. 111,600
B. 116,850
C. 109,150
D. 79,800
2. What is the cost of ending inventory of the Assembly department?
A. 24,720
B. 23,160
C. 22,080
D. 30,000
3. What is the cost of goods manufactured from the Packaging department?
A. 224,700
B. 117,700
C. 136,500
D. 134,150
4. What is the cost of ending inventory of the Packaging department?
A. 76,800
B. 18,000
C. 43,200
D. 51,600
Problem 2
Julius Habulin-siya Corp. had products that undergo two departments, Department 1 and Department 2
departments. The company employed process costing system to record the costs of the products. It was the
policy to use Weighted Average in Department 1 and FIFO in Department 2 and also the normal spoilage
was 5% of the completed units. All materials were added at the start of production. The following were the
data for Department 2:
Department 2 Units
Beginning inventory (40% complete as to conversion) 18,000
Transferred-out from Department 1 105,000
Ending inventory (65% complete as to conversion) 48,000
Completed 65,000
Lost units ?
Cost
Beginning inventory
Transferred-in P15,500
Direct material P26,000
Conversion P33,000
Cost added during the year
Transferred-in P325,500
Direct material P283,500
Conversion P432,400
CASE 1: Assume the company inspects the units when the conversion was 50%.
1. What is the cost of goods manufactured from Department 2?
A. 627,160
B. 612,980
C. 690,180
D. 626,253
2. What is the cost of ending inventory of Department 2?
A. 421,920
B. 285,265
C. 428,974
D. 434,065
CASE 2: Assume the company did not inspect the units.
3. What is the cost of goods manufactured from Department 2?
A. 493,970
B. 617,286
C. 683,150
D. 618,150
4. What is the cost of ending inventory of Department 2?
A. 274,944
B. 294,624
C. 428,544
D. 431,040
