Reference no: EM132937780

Question - Straight Problem - Process Costing - With Losses - Bill Gate Company incurred costs for materials and conversion in the amount of P 45,000 and P 4,860 respectively. As of the same date, the work in process inventory in units of P 6,000 is 40% complete as to conversion costs. As of February 28, 2017, the total units to account for amounted to 51,000 units and the work in process inventory in units amounting to 7,500 is 60% as to conversion costs.

During the production period, the company incurred costs of P 56,544 and P 308,250 for conversion and materials, respectively. The company then started and completed 33,600 units during the period.

A machine malfunction or an improper blending of batch of paint usually causes spoilage. It is the policy of Bill Gate Company to consider normal loss up to a maximum of 5% of the started and completed units during the period. Normal losses are accounted to be part of the product costs while excess loss shall be treated as period costs.

Requirements -

1. What is the EUP for DM?

2. What is the EUP for DL?

3. What is the EUP of abnormal loss in conversion?

4. What is the cost per EUP for materials and conversion?

5. How much is the cost of normal loss units?

6. How much is the period costs or cost of abnormal loss units?

7. How much is the share of transferred out cost in the normal loss?

8. How much is the share of the ending work in process in normal loss?

9. How much is the ending work in process cost?

10. How much is the transferred-out cost to the finished goods?

11. How much is the product cost per unit?

Under the following separate situations:

I. Assume that Bill Gate Company uses First in First Out Method, materials are added at the start of the production process and the inspection point at the end of the production.

II. Assume that Bill Gate uses weighted average method, materials are added at the start of the production process and the inspection point at the end of the production.

III. Assume that Bill Gate uses weighted average method, materials are added at the start of the production process, if the inspection point is at 80%.

IV. Assume that Bill Gate Company uses FIFO, 20% materials are added at the start of the process and the balance at 80% completion; and the inspection point is at the 50% of the production. (With sharing of cost of lost units between to cost and EQIP cost)

V. Assume that Bill Gate Company uses FIFO method, 25% of the materials are added at the start of the process, 35% are added when units are 50% complete as to conversion and the remaining 40% are added when the units are 70% complete as to conversion. If the inspection point is at 70%: (If the policy of the Company is to inspect before adding a new material)

VI. Assume that Bill Gate uses FIFO method, 25% of the materials are added at the start of the process, 35% are added when units are 50% complete as to conversion and the remaining 40% are added when the units are 70% complete as to conversion. If the inspection point is at 70%: (If the policy of the Company set is materials added before inspection)

VII. Assume that Bill Gate uses FIFO and the materials are added at the start of the process. If loss occurred uniformly throughout the process: (method of neglect if applied)