Process Costing - Loss Units

Pani Manufacturing Company has its products processed in two consecutive departments, Mixing and Finishing.
Conversion costs are evenly applied throughout the processes while materials are added at the start of the process
and at the middle of the process for Mixing and Finishing respectively. Cost and production data for August are as
follows:
Cost data: Mixing Finishing

August factory cost
Materials 62,500.00 34,425.00
Labor 80,031.25 52,591.50
Overhead 65,256.25 40,455.00
Cost from Mixing ?
In Process August 1
Materials 14,400.00 -
Labor 6,450.00 840.00
Overhead 5,350.00 640.00
Cost from Mixing 19,920.00
Production data: Mixing Finishing

In Process, August 1 6,000 1/3 done 2,400 1/6 done
Placed in process in August 25,000 26,000
In Process, August 31 ? 1/8 done 2,000 1/4 undone
Loss units 1,000 1,400
Required: Prepare the cost of production report under a) FIFO and b) Average assuming loss units:
5) Are normal discovered at QCI of 90% for Mixing and at 50% completion for Finishing before
adding the materials
6) Base on #5 and assuming loss units are expected at 2% and 3% of the units completed for
Mixing and Finishing respectively.
Lost Units - Normal and Abnormal

Pani Manufacturing Company has its products processed in two consecutive departments, Mixing and Finishing.
Conversion costs are evenly applied throughout the processes while materials are added at the start of the process
and at the middle of the process for Mixing and Finishing respectively. Cost and production data for August are as
follows:
Cost data: Mixing Finishing

August factory cost
Materials 62,500.00 34,425.00
Labor 80,031.25 52,591.00
Overhead 65,256.25 40,455.00
Cost from Mixing ?
In Process August 1
Materials 14,400.00 -
Labor 6,450.00 840.00
Overhead 5,350.00 640.00
Cost from Mixing 19,920.00
Production data: Mixing Finishing

In Process, August 1 6,000 1/3 done 2,400 1/6 done
Placed in process in August 25,000 26,000
In Process, August 31 ? 1/8 done 2,000 1/4 undone
Loss units 1,000 1,400
Required: Prepare the cost of production report under a) FIFO and b) Average assuming loss units:
1) Normal discovered at the beginning or during
2) Normal discovered at the end
3) Abnormal discovered at the beginning
4) Abnormal discovered at the end
5) Are expected at 2% of the unit completed and discovered at the end
6) Are normal discovered at QCI of 90% for Mixing and at 50% completion for Finishing before adding the materials
7) Base on #6 and assuming loss units are expected at 2% and 3% of the units completed for Mixing and Finishing
respectively
terials
shing
MIXING FINISHING
Qty Actual Materials Labor and OH Actual Material Labor and OH
Schedule Units WD EUP WD EUP Units WD EUP WD EUP
In Process April 1 6,000 100% 6,000 1/3 2,000 2,400 0% - 1/6 400
Started/Received 25,000 26,000
Total 31,000 28,400
Transferred to Finished Goods

In Process April 1 6,000 0% - 2/3 4,000 2,400 100% 2,400 5/6 2,000
Started/Received 20,000 100% 20,000 100% 20,000 22,600 100% 22,600 100% 22,600
In Process April 30 4,000 100% 4,000 1/8 500 2,000 100% 2,000 3/4 1,500
Normal loss - Beginning 1,000 0% - 0% - 1,400 0% - 0% -
Total 31,000 24,000 24,500 28,400 27,000 26,100
Cost Charged to Department A Total In Process Current Unit Total In Process Current Unit
EUP EUP
Cost Beg Cost Cost Cost Beg Cost Cost
In Process April 1
Cost from Department A 240,525.78 19,920.00 220,605.78 26,000 8.484838
Cost Added
Materials 76,900.00 14,400.00 62,500.00 24,000 2.604167 34,425.00 - 34,425.00 27,000 1.275000
Labor 86,481.25 6,450.00 80,031.25 24,500 3.266582 53,431.50 840.00 52,591.50 26,100 2.015000
Overhead 70,606.25 5,350.00 65,256.25 24,500 2.663520 41,095.00 640.00 40,455.00 26,100 1.550000
Total 233,987.50 26,200.00 207,787.50 8.534269 128,951.50 1,480.00 127,471.50 4.840000
Adjustment for lost units - 0.482877
Total Cost to be accounted 233,987.50 26,200.00 207,787.50 8.534269 369,477.28 21,400.00 348,077.28 13.807715
Cost Accounted as follows:

Transferred to Department B
In Process April 1
Cost Last Month 26,200.00 21,400
Cost to complete
Materials - X 2.604167 - 2,400 X 1.275000 3,060.00
Labor 4,000 X 3.266582 13,066.33 2,000 X 2.015000 4,030.00
Overhead 4,000 X 2.663520 10,654.08 49,920.41 2,000 X 1.550000 3,100.00
Adj. for lost units 6,000 X - - 49,920.41 0 X 0.482877 - 31,590.00
Started/Received and Completed 20,000 X 8.53427 170,685.37 22,600 X 13.807715 312,054.35
Total Cost Transferred 220,605.78 343,644.35
In Process April 30
Cost from Department A 2,000 X 8.484838 16,969.68
Materials 4,000 X 2.604167 10,416.67 2,000 X 1.275000 2,550.00
Labor 500 X 3.266582 1,633.29 1,500 X 2.015000 3,022.50
Overhead 500 X 2.663520 1,331.76 1,500 X 1.550000 2,325.00
Adj. for lost units 4,000 X - - 13,381.72 2,000 X 0.482877 965.75 25,832.93
Total costs as accounted for 233,987.50 369,477.28
Material Labor Overhead Total Mixing Material Labor Overhead Total

Cost of Normal loss - - - - 11,878.77 - - - 11,878.77
Units identified with lost units (Started/Received and Completed + IP end) 24,000 (Received and Completed + IP end) 24,600
Adjustment for lost units - 0.482877
-
MIXING FINISHING
In Process April 1 6,000 100% 6,000 1/3 2,000 2,400 0% - 1/6 400
Total 31,000 28,400

In Process April 1 6,000 0% - 2/3 4,000 2,400 100% 2,400 5/6 2,000
In Process April 30 4,000 100% 4,000 1/8 500 2,000 100% 2,000 3/4 1,500
Normal loss - Beginning 1,000 100% 1,000 100% 1,000 1,400 100% 1,400 100% 1,400
Total 31,000 25,000 25,500 28,400 28,400 27,500
Cost Charged to Department A Total In Process Current Unit Total In Process Current Unit
EUP EUP
In Process April 1
Cost from Department A 241,058.73 19,920.00 221,138.73 26,000 8.505336
Cost Added
Materials 76,900.00 14,400.00 62,500.00 25,000 2.500000 34,425.00 - 34,425.00 28,400 1.212148
Labor 86,481.25 6,450.00 80,031.25 25,500 3.138480 53,431.50 840.00 52,591.50 27,500 1.912418
Overhead 70,606.25 5,350.00 65,256.25 25,500 2.559069 41,095.00 640.00 40,455.00 27,500 1.471091
Total 233,987.50 26,200.00 207,787.50 8.197549 128,951.50 1,480.00 127,471.50 4.595657

Transferred to Department B
In Process April 1
Cost to complete
Materials - X 2.500000 - 2,400 X 1.212148 2,909.15
Labor 4,000 X 3.138480 12,553.92 2,000 X 1.912418 3,824.84
Overhead 4,000 X 2.559069 10,236.27 48,990.20 2,000 X 1.471091 2,942.18 31,076.17
Cost of normal loss 1,000 X 8.19755 8,197.55 1,400 X 13.100993 18,341.39 6,550.50
In Process April 30
Cost from Department A 2,000 X 8.505336 17,010.67
Materials 4,000 X 2.500000 10,000.00 2,000 X 1.212148 2,424.30
Labor 500 X 3.138480 1,569.24 1,500 X 1.912418 2,868.63
Overhead 500 X 2.559069 1,279.53 12,848.77 1,500 X 1.471091 2,206.64 24,510.23
MIXING FINISHING
In Process August 1 6,000 100% 6,000 1/3 2,000 2,400 0% - 1/6 400
Total 31,000 28,400

In Process August 1 6,000 0% - 2/3 4,000 2,400 100% 2,400 5/6 2,000
In Process August 31 4,000 100% 4,000 1/8 500 2,000 100% 2,000 3/4 1,500
Abnormal loss - End 1,000 100% 1,000 100% 1,000 1,400 100% 1,400 100% 1,400
Total 31,000 25,000 25,500 28,400 28,400 27,500
Cost Charged to Mixing Total In Process Current Unit Total In Process Current Unit
EUP EUP
In Process August 1
Cost from Mixing 232,861.18 19,920.00 212,941.18 26,000 8.190045
Cost Added
Materials 76,900.00 14,400.00 62,500.00 25,000 2.500000 34,425.00 - 34,425.00 28,400 1.212148
Labor 86,481.25 6,450.00 80,031.25 25,500 3.138480 53,431.50 840.00 52,591.50 27,500 1.912418
Overhead 70,606.25 5,350.00 65,256.25 25,500 2.559069 41,095.00 640.00 40,455.00 27,500 1.471091
Total 233,987.50 26,200.00 207,787.50 8.197549 128,951.50 1,480.00 127,471.50 4.595657

Transferred to Finishing
In Process August 1
Cost to complete
Materials - X 2.500000 - 2,400 X 1.212148 2,909.15
Labor 4,000 X 3.138480 12,553.92 2,000 X 1.912418 3,824.84
Overhead 4,000 X 2.559069 10,236.27 48,990.20 2,000 X 1.471091 2,942.18 31,076.17
In Process August 31
Cost from Mixing 2,000 X 8.190045 16,380.09
Materials 4,000 X 2.500000 10,000.00 2,000 X 1.212148 2,424.30
Labor 500 X 3.138480 1,569.24 1,500 X 1.912418 2,868.63
Overhead 500 X 2.559069 1,279.53 12,848.77 1,500 X 1.471091 2,206.64 23,879.65
Factory overhead control 1,000 X 8.19755 8,197.55 1,400 X 12.785702 17,899.98
MIXING FINISHING
Total 31,000 28,400

Normal Loss - End 520 100% 520 100% 520 500 100% 500 100% 500
Abnormal loss - End 480 100% 480 100% 480 900 100% 900 100% 900
Total 31,000 25,000 25,500 28,400 28,400 27,500
EUP EUP
In Process August 1
Cost from Mixing 237,123.90 19,920.00 217,203.90 26,000 8.353996
Cost Added
Materials 76,900.00 14,400.00 62,500.00 25,000 2.500000 34,425.00 - 34,425.00 28,400 1.212148
Labor 86,481.25 6,450.00 80,031.25 25,500 3.138480 53,431.50 840.00 52,591.50 27,500 1.912418
Overhead 70,606.25 5,350.00 65,256.25 25,500 2.559069 41,095.00 640.00 40,455.00 27,500 1.471091
Total 233,987.50 26,200.00 207,787.50 8.197549 128,951.50 1,480.00 127,471.50 4.595657

In Process August 1
Cost to complete
Materials - X 2.500000 - 2,400 X 1.212148 2,909.15
Labor 4,000 X 3.138480 12,553.92 2,000 X 1.912418 3,824.84
Overhead 4,000 X 2.559069 10,236.27 48,990.20 2,000 X 1.471091 2,942.18 31,076.17
Cost of normal loss 520 X 8.19755 4,262.73 500 X 12.949653 6,474.83
Materials 4,000 X 2.500000 10,000.00 2,000 X 1.212148 2,424.30
Labor 500 X 3.138480 1,569.24 1,500 X 1.912418 2,868.63
Overhead 500 X 2.559069 1,279.53 12,848.77 1,500 X 1.471091 2,206.64 24,207.55
Factory overhead control 480 X 8.19755 3,934.82 900 X 12.949653 11,654.69
MIXING FINISHING
Total 31,000 28,400

Normal loss - 90%/50% 1,000 100% 1,000 90% 900 1,400 0% - 50% 700
Total 31,000 25,000 25,400 28,400 27,000 26,800
EUP EUP
In Process August 1
Cost from Mixing 241,047.51 19,920.00 221,127.51 26,000 8.504904
Cost Added
Materials 76,900.00 14,400.00 62,500.00 25,000 2.500000 34,425.00 - 34,425.00 27,000 1.275000
Labor 86,481.25 6,450.00 80,031.25 25,400 3.150837 53,431.50 840.00 52,591.50 26,800 1.962369
Overhead 70,606.25 5,350.00 65,256.25 25,400 2.569144 41,095.00 640.00 40,455.00 26,800 1.509515
Total 233,987.50 26,200.00 207,787.50 8.219980 128,951.50 1,480.00 127,471.50 4.746884
0.531007

In Process August 1
Cost to complete
Materials - X 2.500000 - 2,400 X 1.275000 3,060.00
Labor 4,000 X 3.150837 12,603.35 2,000 X 1.962369 3,924.74
Overhead 4,000 X 2.569144 10,276.57 49,079.92 2,000 X 1.509515 3,019.03
Adjustment for loss units 2,400 X 0.531007 1,274.42 32,678.19
Cost of normal loss 7,647.98 -
Materials 4,000 X 2.500000 10,000.00 2,000 X 1.275000 2,550.00
Labor 500 X 3.150837 1,575.42 1,500 X 1.962369 2,943.55
Overhead 500 X 2.569144 1,284.57 12,859.99 1,500 X 1.509515 2,264.27
Cost of normal loss

Materials 1,000 X 2.500000 2,500.00 - X 1.275000 -
Labor 900 X 3.150837 2,835.75 700 X 1.962369 1,373.66
Overhead 900 X 2.569144 2,312.23 700 X 1.509515 1,056.66
Total 7,647.98 14,337.18
Divide by units that will absorbed the normal loss 27000
Adjustment for loss units 0.5310068
MIXING FINISHING
Total 31,000 28,400

Normal loss - 90%/50% 520 100% 520 90% 468 1,400 0% - 50% 700
Abnormal loss - 90%/50% 480 100% 480 90% 432
Total 31,000 25,000 25,400 28,400 27,000 26,800
EUP EUP
In Process August 1
Cost from Mixing 237,376.48 19,920.00 217,456.48 26,000 8.363711
Cost Added
Materials 76,900.00 14,400.00 62,500.00 25,000 2.500000 34,425.00 - 34,425.00 27,000 1.275000
Labor 86,481.25 6,450.00 80,031.25 25,400 3.150837 53,431.50 840.00 52,591.50 26,800 1.962369
Overhead 70,606.25 5,350.00 65,256.25 25,400 2.569144 41,095.00 640.00 40,455.00 26,800 1.509515
Total 233,987.50 26,200.00 207,787.50 8.219980 128,951.50 1,480.00 127,471.50 4.746884
0.523686

In Process August 1
Cost to complete
Materials - X 2.500000 - 2,400 X 1.275000 3,060.00
Labor 4,000 X 3.150837 12,603.35 2,000 X 1.962369 3,924.74
Overhead 4,000 X 2.569144 10,276.57 49,079.92 2,000 X 1.509515 3,019.03
Cost of normal loss 3,976.95 -
Materials 4,000 X 2.500000 10,000.00 2,000 X 1.275000 2,550.00
Labor 500 X 3.150837 1,575.42 1,500 X 1.962369 2,943.55
Overhead 500 X 2.569144 1,284.57 12,859.99 1,500 X 1.509515 2,264.27
Factory Overhead Control 3,671.03
Cost of normal loss

Materials 520 X 2.500000 1,300.00 - X 1.275000 -
Labor 468 X 3.150837 1,474.59 700 X 1.962369 1,373.66
Overhead 468 X 2.569144 1,202.36 700 X 1.509515 1,056.66
Total 3,976.95 14,139.51
Divide by units that will absorbed the normal loss 27000
Adjustment for loss units 0.5236857
Cost of Abnormal loss

Cost from Mixing
Materials 480 X 2.500000 1,200.00
Labor 432 X 3.150837 1,361.16
Overhead 432 X 2.569144 1,109.87
Total 3,671.03

Process Costing - Loss Units

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Process Costing - Loss Units

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Pani Manufacturing Company has its products processed in two consecutive departments, Mixing and Finishing.

Cost data: Mixing Finishing

Production data: Mixing Finishing

Lost Units - Normal and Abnormal

Cost data: Mixing Finishing

Production data: Mixing Finishing

Transferred to Finished Goods

Cost Accounted as follows:

Material Labor Overhead Total Mixing Material Labor Overhead Total

Transferred to Finished Goods

Cost Accounted as follows:

Transferred to Finished Goods

Cost Accounted as follows:

Transferred to Finished Goods

Cost Accounted as follows:

Transferred to Finished Goods

Cost Accounted as follows:

Cost of normal loss

Transferred to Finished Goods

Cost Accounted as follows:

Cost of normal loss

Cost of Abnormal loss

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