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PSBA-MANILA
Accounting 10
Prof. C. Gonzaga
PROCESS COSTING (Using WEIGHTED AVERAGE METHOD)
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The weighted average method is a method of process costing that computes an average cost per equivalent unit of production; it
combines beginning inventory units and costs with current production and costs, respectively, to compute that average.

The weighted average method is not concerned about what quantity of work was performed in the prior period on the units in
beginning inventory; it only focuses on units that are completed in the current period and units remaining in ending inventory.

The method does not distinguish between units in beginning inventory and units entering production during a period.

Average unit cost is found by dividing the total cost to be accounted for by the total equivalent units of production and is calculated as
follows:
Beginning Inventory Cost Current Period Cost
Unit Cost
Weighted Average Equivalent Units of Production
Total Cost Incurred

Total Equivalent Units of Effort

The costs to be accountedin a subsequent department are segregated under two categories: Prior Department Costs and Costs This
Department.
Costs This Department consist of 1) cost of work-in-process inventory, beginning, and 2) current costs incurred during the period.

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CLASS PROBLEMS
PROBLEM 1
The following production data pertain to Nippon Company:
Beginning inventory (30% complete as to Material B
and 60% complete for conversion)
Started this cycle
Ending inventory (50% complete as to Material B
and 80% complete for conversion)
Beginning inventory costs:
Material A
Material B
Conversion

P14,270
5,950
5,640

Current Period costs:

Material A
Material B
Conversion

P40,000
70,000
98,100

700 units
2,000 units
500 units

Material A is added at the start of production, while Material B is added uniformly throughout the process.
REQUIRED: Prepare a cost of production report using average costing method.
PROBLEM 2
Aussie Manufacturing Company has two production departments that use weighted average method of costing, namely, Assembly Department and
Finishing Department. The production data of the Finishing Department for the month of January, show the following:
Units: In process, January 1 (1/3 completed), 30,000 units; Received from the Assembly Department during January, 130,000 units; Finshed and
transferred to stockroom, 110,000 units; and In-process, January 31 (4/5 completed), 50,000 units. .
Costs:
Work-in-process, January 1:
Costs from Assembly Department
Materials
Labor
Factory overhead
Costs incurred during January:
Materials
Labor
Factory overhead
Costs received from the Assembly Department in January
Assume that materials were applied evenly throughout the process.

P 18,000
3,600
2,800
2,400
56,400
42,200
27,600
60,000

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REQUIRED: Prepare a cost of production report of the Finishing Department for the month of January.
PROBLEM 3
The following represents an outline of the cost and production statistics of the Finnish Company for the month of September. Using the average
costing method, you are asked to prepare: 1) The cost of production report for the month of September. 2) Journal entries to record information
given on the report.
Department 2
Department 3
Cost of units received from Department 1
P59,360
Work-in-process, Sept. 1:
Cost from preceding department
28,000
P24,100
Material
7,000
Labor
7,600
1,300
Factory overhead
1,520
520
Cost during September:
Material
33,500
Labor
13,600
17,600
Factory overhead
2,720
7,040
Production statistics:
Units in process, Sept. 1
8,000
5,000
Received from preceding department
18,000
20,000
Put into process
3,000
Accounted for as follows:
Units completed and transferred
20,000
24,000
Units in process, Sept. 30
4,000
3,000
Units lost in process
2,000
1,000
Degree of completion of work-in-process at Sept. 30:
Material
100%
Labor
30%
40%
Factory Overhead
30%
40%
PROBLEM 4
The production statistics of Department B of Swiss Company for the month of March showed the following data:
Units:
Completed and transferred to stockroom
16,000 units
In process, March 31 (100% complete as to materials, 2/3 for conversion costs)
3,000 units
Lost units in process
1,000 units
The costs received from Department A during the month totaled P9,000 at a unit average cost of P0.50. The work in process on March 1 were 40%
complete, with a carried costs from last month of P3,160.
The costs incurred in Department B for the month are as follows: Materials, P5,000; Labor, P2,400; Overhead, P1,500, resulting in unit average
costs of P0.30 for materials, P0.18 for labor, and P0.11 for overhead.
REQUIRED: Present a cost of production report for Department B using the average costing method. Show supporting computations when
necessary.
PROBLEM 5
French Company manufactures a single product in two production departments. For the month of February, the costs and production data were as
follows:
Cost data
Mixing Dept.
Finishing Dept.
Work-in-process, Feb. 1:
Costs from preceding department
P12,000
Materials
P8,400
Labor
7,000
12,500
Factory overhead
4,100
9,000
Costs added during February:
Materials
18,000
Labor
10,400
28,000
Factory overhead
7,500
18,000
Production data:
In process, Feb. 1
5,000
6,000
In process, Feb 28
4,000
5,000
Started in process/ received from prior department
10,000
10,000
Completed and transferred
10,000
11,000
Percentage of completion of in process units:
Feb. 1:
Materials
100%
Labor
50%
60%
Factory overhead
50%
60%

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February 28:
Materials
Labor
Factory overhead

80%
40%
40%

50%
50%

Lost units are encountered at the start of the process. The company uses the average method of costing in inventories.
REQUIRED: Prepare a cost of production report for the month.
ACCOUNTING FOR ACCRETION (INCREASED UNITS)
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Accretion refers to an increase in units or volume because of the addition of material in successor departments or to
factors that are inherent in the production process.

The occurrence of accretion in a successor processing department requires that both the number of units transferred
in and the related cost per unit be adjusted to reflect the occurrence.

CLASS PROBLEM 6
Department A of Swedish Company transferred 12,000 units at a total costs of P7,200 to Department B during August. The production data of
Department B and C are as follows:
In process, Aug. 1
Stage of completion
Finished and transferred
In process, Aug. 31
Stage of completion
Lost units ( Lost units were encountered during the process in Department B, while in Department
C, these were lost at the end of the process.)
Costs:
Costs incurred during August:
Materials
Labor
Factory overhead
Costs of in-process units, Aug. 1

Department B
6,000
1/3
10,000
?
1/3
2,000

Department C
8,000

?
4,000

1,000

P4,000
3,000
1,000
2,450

P12,000
3,900
2,600
4,500

In Department C, materials were applied at the start of the process while conversion costs were charged evenly. A 20% increase in quantity occurred
at the start of the process. In Department B, all elements of costs were applied uniformly.
REQUIRED: Using FIFO costing, prepare a cost of production report for Department B and C for the month of August, showing supporting
computation schedules.
PROBLEM 7
Department 2 of the Dannish Company presents to you the following production data:
Received from Department 1 in November
Increase in volume due to added materials at the start of the process in Department 2
Finished and transferred to Department 3
In process, November 30 (100% materials applied, labor and overhead)
The costs of production for the month showed the following:
Material costs
Direct labor costs
Factory overhead
The total costs of transfer from Department 1 were recorded at
REQUIRED: Prepare a cost of production report of Department 2 using the weighted average method.

70,000 units
30,000 units
80,000 units
10,000 units
P38,000
17,000
42,500
P70,000