1

MAF201 TUTORIAL
CHAPTER 2:
PROCESS COSTING

MAF201 FINAL EXAM QUESTIONS – ANSWER KEY

 TUTORIAL
2

◻ Final Exam Questions:

July 2023
Feb 2022
July 2021
July 2020
Dec 2019
June 2019
Dec 2018
June 2018
Jan 2018
March 2017
Oct 2016
March 2016
Sept 2015
March 2015
3 FE JULY 2023 Q2
 * Information from Q

*** **** Figures from Workings below

FE JULY 2023 Q2
Mixing Process account
4
Units CPU Total Units CPU Total
RM RM RM RM
Direct Materials 75,000* 7.05* 528,750 Trans to 65,500 15.50** 1,015,250
Heating
Direct labour 412,500 Normal Loss 7,500*** 1.50* 11,250

Prod OH 116,250 Abnormal Loss 2,000**** 15.50** 31,000

75,000 1,057,500 75,000 1,057,500

Balanced Dr and Cr!

Cost per Unit = Total Input Cost – NL Scrap Value
Expected Output Units NL = 10% x 75,000 = 7,500***
AL = Actual Loss – NL
= RM1,057,500 – 11,250 = 9,500 – 7,500
75,000 – 7,500 = 2,000****
= RM15.50/kg**
 * Information from Q

** Figures from Statement of Cost and Evaluation

FE JULY 2023 Q2 *** **** Figures from Workings below
Heating Process account
5

Units CPU Total Units CPU Total

RM RM RM RM
OWIP 2,500* 135,000 FG 66,600* 2,130,939**
Trans from 65,500 15.50 1,015,250 Normal 4,676*** 2.50* 11,690**
Mixing Process Loss
Direct labour 493,275* CWIP 1,200* 26,880**

Production OH 396,180*

Abnormal Gain 4,476**** 129,804**

72,476 2,169,509 72,476 2,169,509

Balanced Dr and Cr!

PROD = OWIP + TRANS - CWIP NL = 7% x 66,800 = 4,676***
= 2,500 + 65,500 – 1,200 AG = Output - Input
= 66,800 [FG+NL-AG] = 66,600 + 4,676 + 1,200 – 2,500 –
65,500
= 4,476****
 FE JULY 2023 Q2
6
Statement of Equivalent Unit [FIFO]
% left to be process

Input Output Trans-in Direct Labour Prod OH

From P1
% Units % Units % Units

OWIP 2,500 OWIP 2,500 0 30% 750 50% 1,250

TF P1 65,500 CP 64,100 100 64,100 100 64,100 100 64,100

NL 4,676 100 4,676 100 4,676 100 4,676

AG (4,476) 100 (4,476) 100 (4,476) 100 (4,476)

CWIP 1,200 100 1,200 60% 720 40% 480

68,000 68,000 65,500 65,770 66,030

Balanced Inputand Output!
Figures go to Statement of Cost and Evaluation
INPUT = OUTPUT
CP = INPUT – OWIP – NL + AG - CWIP
68,000 = OWIP + CP – NL + AG -
= 68,000 – 2,500 – 4,676 + 4,476 –
CWIP
1,200
= 66,600 – 4,676 + AG - 1,200
= 64,100
= 4,476
 FE JULY 2023 Q2
Statement of Cost and Evaluation [FIFO]
7 Cost Trans- in D Labour Prod OH Total
RM RM RM
Current Cost RM1,015,250 RM493,275 RM396,180
Total EQ units 65,500 65,770 66,030
= Cost per EQ unit Figures from Statement of Equivalent Unit
= RM15,50 = RM7.50 = RM6.00 RM29.00
Evaluation of:
Finished Goods
a. OWIP b/d 135,000
b. OWIP - 750 x RM7.50 1,250 x RM6.00 13,125

c. CP 64,100 x RM29.00 1,858,900

d. Net NL 4,676 x RM29.00 123,914

= NL Value – NL SV =RM135,604
= RM135,604 – RM11,690
Total 2,130,939

AG 4,476 x RM29.00 129,804

CWIP 1,200 x RM15.50 720 x RM7.50 480 x RM6.00 26,880

Figures go to Heating Process a/c
 FE JULY 2023 Q2
8

Joint Products By-products

Two or more main products produced An incidental product produced from
from the same operation process. the common processing operation.
Each of the product has a The product has an insignificant sales
significant sales value as the main value as compared to the main
products. products.
9 FE FEB 2023 Q2
 * Information from Q

*** Figures from Workings below

FE FEB 2023 Q2
Blending Process account
10
Units CPU Total Units CPU Total
RM RM RM RM
Direct Materials 19,500* 136,500* Trans to Bottling 18,100 13.00** 235,300

Direct labour 60,000* Normal Loss 1,170 2.00* 2,340

Prod OH 44,130* Abnormal Loss 230*** 13.00** 2,990

19,500 240,630 19,500 240,630

Balanced Dr and Cr!

Cost per Unit = Total Input Cost – NL Scrap Value
Expected Output Units NL = 6% x 19,500 = 1,170
AL = Actual Loss – NL
= RM240,630 – RM2,340 = 1,400 – 1,170
19,500 – 1,170 = 230***
= RM13.00**
 * Information from Q

** Figures from Statement of Cost and Evaluation

FE FEB 2023 Q2
Bottling Process account
11
Units CPU Total Units CPU Total
RM RM RM RM

OWIP 600* 2,600* FG 15,910 237,020**

Trans from 18,100 235,300 Normal Loss 1,190*** 2.00* 2,380

Blending Process
Add Materials 1,000* 18,660* CWIP* 2,700 36,072**

Direct labour 14,416*

Production OH 3,096*

Abnormal Gain 100**** 1,400**

19,800 275,472 19,800 275,472

NL = 7% x 17,000 = 1,190***
PROD = OWIP + TRANS + ADD MATERIAL - CWIP
AG = Actual Loss – NL
= 600 + 18,100 + 1,000 -2,700
= 1,090 – 1,190
= 17,000 [FG+NL-AL]
= 100****
 FE FEB 2023 Q2
12
Statement of Equivalent Unit [WAM]

Input Output Trans-in Materials Direct Labour Prod OH

From P1
% Units % Units % Units % Units

TF P1 19,700 CP 15,910 100 15,910 100 15,910 100 15,910 100 15,910

NL 1,190 100 1,190 100 1,190 100 1,190 100 1,190

AG (100) 100 (100) 100 (100) 100 (100) 100 (100)

CWIP 2,700 100 2,700 80% 2,160 60% 1,620 40% 1,080

19,700 19,700 19,700 19,160 18,620 18,080

Balanced Input & Output

Figures go to Statement of Cost and Evaluation
 FE FEB 2023Statement
Q2 of Cost and Evaluation [WAM]
13 Cost Trans- in Added D Labour Prod OH Total
RM Materials RM RM
OWIP/Previous Cost + RM1,100 + RM500 + RM480 + RM520 +
Current Cost RM235,300 RM18,660 RM14,416 RM3,096
Total Cost RM236,400 RM19,160 RM14,896 RM3,616 RM14.00
Total EQ units 19,700 19,160 18,620 18,080
= Cost per EQ unit Figures from Statement of Equivalent Unit
= RM12.00 = RM1.00 = RM0.80 = RM0.20
Evaluation of:
Finished Goods
c. CP 15,910 x RM14.00 222,740

d. Net NL 1,190 x RM14.00 14,280

= NL Value – NL SV =RM19,000
= RM16,660 – RM2,380
= RM14,280
Total 237,020

AG 100 x RM14.00 1,400

CWIP 2,700 x RM12.00 2,160 X RM1.00 1,620 x RM0.80 1,080 x RM0.20 ?

Figures go to Bottling Process a/c
 FE FEB 2023 Q2
14

Examples
Job Costing It is used for unique products A custom home builder
Is used for very small production A residential plumbing
runs
Process It is used for standardized products A cell phone manufacturer
Costing It is used for large production runs A manufacturer of
multivitamins
15 FA JULY 2022 Q2
 FA JULY 2022 Q2
Assembly Process account
16
Units CPU Total Units CPU Total
RM RM RM RM
Direct Materials 20,000 99,150 Trans to 19,300 13.80 266,340
Finishing
Add Materials 40,050 Normal Loss 600 3.00 1,800

Direct labour 70,750 Abnormal Loss 100 13.80 1,380

Prod OH 59,570

20,000 269,520 20,000 269,520

Cost per Unit = Total Input Cost – NL Scrap Value

Expected Output Units
NL = 3% x 20,000 = 600
= RM269,520 – RM1,800 AL = Actual Loss – NL
20,000 – 600 = 700 - 600
= RM13.80
 FA JULY 2022 Q2
Finishing Process account
17
Units CPU Total Units CPU Total
RM RM RM RM
OWIP 1,400 49,700 FG 18,400 496,736

Trans from 19,300 13.80 266,340 Normal Loss 760 3,040

Assembly Process
Add Materials 51,948 CWIP 1,700 34,442

Direct labour 86,310

Production OH 75,920

Abnormal Gain 160 4,000

20,860 534,218 20,860 534,218

NL = 4% x 19,000 = 760
PROD = OWIP + TRANS - CWIP
AG = Actual Loss – NL
= 1,400 + 19,300 – 1,700
= 600 – 760
= 19,000 [FG+NL+AL]
= 160
 FA JULY 2022 Q2
18
Statement of Equivalent Unit [FIFO]
% left to be process

Input Output Trans-in Added Direct Labour Prod OH

From P1 Materials
% Units % Units % Units % Units

OWIP 1,400 OWIP 1,400 0 20% 280 40% 560 50% 700

TF P1 19,300 CP 17,000 100 17,000 100 17,000 100 17,000 100 17,000

NL 760 100 760 100 760 100 760 100 760

AG (160) 100 (160) 100 (160) 100 (160) 100 (160)

CWIP 1,700 100 1,700 80% 1,360 60% 1,020 40% 680

20,700 20,700 19,300 19,240 19,180 18,980

CP = INPUT – OWIP – NL + AG - CWIP

= 19,300 –1,400 – 760 + 160 – 1,700
= 17,000
 FA JULY 2022 Q2
Statement of Cost and Evaluation [FIFO]
19 Cost Trans- in Added D Labour Prod OH Total
RM Materials RM RM
Current Cost RM266,340 RM51,948 RM86,310 RM75,920
Total EQ units 19,300 19,240 19,180 18,890
= Cost per EQ unit = RM13.80 = RM2.70 = RM4.50 = RM4.50 RM25.00
Evaluation of:
Finished Goods
a. OWIP b/d 49,700
b. OWIP - 280 X RM2.70 560 x RM4.50 700 x RM4.50 6,076
=RM = RM = RM
c. CP 17,500 x RM25.00 425,000

d. Net NL 760 x RM25.00 15,960

= NL Value – NL SV =RM19,000
= RM19,000 – RM3,040
= RM15,960
Total ?

AG 160 x RM25.00 ?

CWIP 1,700 x RM13.80 1,360 X RM2.70 1,020 x RM4.50 680 x RM4.50 ?

 FA JULY 2022 Q2
20

◻ 4 possible reasons of having Abnormal Loss:

Use of inefficient equipment
Use of sub-standard/low quality of input materials
Use of untrained or unskilled workers
Frequent electricity breakdown
Improper supervision
(or any other acceptable answers)
21 FA FEB 2022 Q2
 FA FEB 2022 Q2
Moulding Process account
22
Units CPU Total Units CPU Total
RM RM RM RM
Direct Material 20,000 144,000 Trans to 19,100 14.50 276,950
Finishing
Direct Labour 72,000 Normal Loss 1,000 1.20 1,200

Production OH 60,700

Abnormal Gain 100 14.50 1,450

20,100 278,150 20,100 278,150

Cost per Unit = Total Input Cost – NL Scrap Value

Expected Output Units

= RM276,000 – RM1,200 NL = 5% x 20,000 = 1,000

20,000 – 1,000
= RM14.50
 FA FEB 2022 Q2
Finishing Process account
23
Units CPU Total Units CPU Total
RM RM RM RM
OWIP 1,000 66,000 FG 18,500 497,436

Trans from 19,100 14.50 276,950 Normal Loss 980 1,960

Moulding Process
Direct Labour 108,920 Abnormal 120 2,784
Loss
Production OH 60,605 CWIP 500 10,295

20,100 512,475 20,100 512,475

NL = 5% x 19,600 = 980
PROD = OWIP + TRANS - CWIP AL = INPUT – FG –NL –CWIP FG = 18,500
= 1,000 + 19,100 – 500 = 20,100 – 18,500 – 980 – [given]
= 19,500 [FG+NL+AL] 500
= 120
 FA FEB 2022 Q2
24
Statement of Equivalent Unit [FIFO]
% left to be process

Input Output Trans-in Direct Labour Prod OH

From P1
% Units % Units % Units

OWIP 1,000 OWIP 1,000 0 50 500 60 600

TF P1 19,100 CP 17,500 100 17,500 100 17,500 100 17,500

NL 980 100 980 100 980 100 980

AL 120 100 120 100 120 100 120

CWIP 500 100 500 80 350 50 350

20,100 20,100 19,100 19,450 19,550

CP = INPUT – OWIP – NL – AL - CWIP

= 20,100 –1,000 – 980 – 120 - 500
= 17,500
 FA FEB 2022 Q2
Statement of Cost and Evaluation [FIFO]
25 Cost Trans- in D Labour Prod OH Total
RM RM RM
Current Cost RM276,950 RM108,920 RM60,605
Total EQ units 19,100 19,450 19,550
= Cost per EQ unit = RM14.50 = RM5.60 = RM3.10 RM23.20
Evaluation of:
Finished Goods
a. OWIP b/d 66,000
b. OWIP - 500 x RM5.60 600 x RM2.55 406,000
= RM = RM
c. CP 17,500 x RM23.20
d. Net NL 980 x RM23.20 20,776
= NL Value – NL SV =RM22,736
= RM22,736 – RM1,960
= RM20,776
Total ?
AL 120 x RM23.20 ?
CWIP 500 x RM14.50 350 x RM5.60 350 x RM3.10 ?
 FA FEB 2022 Q2
26

CRITERIA NORMAL LOSS ABNORMAL LOSS

Treatment in Cost of normal loss is borne by Cost of abnormal losses is not borne by
accounts the remaining good units. the remaining good units.
the cost of normal losses is included the cost of abnormal losses is treated as
as part of the cost of good period cost and is valued on the same basis
production, and therefore, the cost of as good production. The cost is written off
normal loss is absorbed into the cost in the statement of profit or loss at the end
of completed production. of the accounting period.
Part of cost It is treated as a part of cost. It is charged to profit and loss account
(SOPL) and not being treated as a part
of cost.

Explain TWO (2) reasons why joint costs need to be apportioned to each joint product
produced by the company.
- To value the closing inventories of each joint product
- To compute the costs of each joint product
- To compute the profitability of each joint product
- To calculate the Selling Price
(or any other relevant answers
27 FA JULY 2021Q2
 FA JULY 2021
Cutting Process account
28

Units CPU Total Units CPU Total

RM RM RM RM
Direct Material 1,000 3,000 Trans to 800 9.50 7,600
Sewing
Direct Labour 2,400 Normal Loss 100 1.90 190

Overhead 3,340 Abnormal Loss 100 9.50 950

1,000 9,740 1,000 9,740

Cost per Unit = Total Input Cost – NL Scrap Value

Expected Output Units

= RM8,740 – RM190
1,000 - 100
= RM9.50
 FA JULY 2021
Sewing Process account
29

Units CPU Total Units CPU Total

RM RM RM RM
OWIP 450 5,394 FG 1,110 22,488

Trans from Cutting 800 7,600 CWIP 50 694

Process
Added Material 1,000 Normal Loss 120 1.20 144

Direct Labour 5,000

Overhead 3,780

Abnormal Gain 30 552

1,280 23,326 1,280 23,326

PROD = OWIP + TRANS - CWIP AG = NL – Actual Loss FG = INPUT – CWIP - NL

= 450 +800 – 50 = 120 - 90 = 1,280 – 50 - 120
= 1,200 = 30 = 1,110
NL = 10% X 1,200 = 120
 FA JULY 2021
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Statement of Equivalent Unit [WAM]
Input Output From Add Direct Overheads
Cutting Material Labour
% Units % Units % Units % Units
OWIP 450 FG 1,110 100 1,110 100 1,110 100 1,110 100 1,110

Trans in 800 CWIP 50 100 50 70 35 60 30 40 20

NL 120 100 120 100 120 100 120 100 120

AG [30] 100 [30] 100 [30] 100 [30] 100 [30]

1,250 1,250 1,250 1,235 1,230 1,220

 FA JULY 2021
Statement of Cost and Evaluation [WAM]
31 Cost Material Add Material Direct Labour Overhead Total
RM RM RM RM RM
Previous Cost + RM2,900 + RM976 + RM1,150 + RM368 +
Current Cost RM7,600 RM1,000 RM5,000 RM 3,780
Total EQ units 1,250 1,235 1,230 1,220
= Cost per EQ unit = RM8.40 = RM1.60 = RM5.00 = RM3.40 RM18.40
Evaluation of:
Finished Goods
FG 1,110 X RM18.40 569,905
Net NL 120 x RM18.40 2,064
= NL Value – NL SV =RM2,208
= RM2,208 – RM144
=RM2,064
Total ?
AG 30 x RM18.40 552
CWIP 50 x RM8.40 35 x RM1.60 30 x RM5.00 20 x RM3.40 694
=RM =RM =RM = RM
 FA JULY 2021
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CRITERIA NORMAL LOSS ABNORMAL LOSS

Expectation Expected Loss Unexpected Loss

Occurrence Occurs due to the inherent nature Occurs due to abnormal conditions
of the materials and production or due to mishap, mischief, and
process under normal inefficiency.
conditions
Controllability Uncontrollable Controllable
Prevention / Cannot be prevented / Can be prevented from occurring again
Avoidability unavoidable / avoidable
Causes Arises due to reasons like arises due to reasons like fire, riot,
evaporation, normal leakage, flood, theft, plant breakdown, sub-standard
spoilage, loss of weight, drying material, carelessness,
etc. inefficient operation, accident etc.
Treatment in Cost of normal loss is borne by Cost of abnormal losses is not borne by
accounts the remaining good units. the remaining good units.
Part of cost It is treated as a part of cost. It is charged to profit and loss account
(SOPL) and not being treated as a part
of cost.
33 FA FEB 2021 Q2
 FA FEB 2021 Q2
Roasting Process account
34
Units CPU Total Units CPU Total
RM RM RM RM
Direct Material 15,000 45,000 Trans to 12,000 5.00 60,000
Packaging
Direct Labour 12,000 Abnormal Loss 3,000 5.00 15,000

Direct expenses 10,000 No losses are expected to be incurred in this

process. So, no NL.
Production OH 8,000

15,000 75,000 15,000 75,000

Cost per Unit = Total Input Cost – NL Scrap Value

Expected Output Units

= RM75,000 – RM0
15,000 - 0 AL = INPUT – OUTPUT
= RM5.00 = 15,000 – 12,000
= 3,000
 FA FEB 2021 Q2
Packaging Process account
35
Units CPU Total Units CPU Total
RM RM RM RM
OWIP 1,400 17,000 FG 17,000 126,224

Trans from Roasting 12,000 5.00 60,000 CWIP 1,000 5,200

Process
Added Material 5,000 4.00 20,000 Normal Loss 1,290 1.40 1,806

Conversion cost 30,000

Abnormal Gain 890 6,230

19,290 133,230 19,290 133,230

NL = 400 + 890 = 1,290

AG = 890 [lesser than NL]

FG = 17,000
 FA FEB 2021 Q2
36
Statement of Equivalent Unit [WAM]
Input Output From P1 Add Material Conversion
costs
% Units % Units % Units
OWIP 1,400 FG 17,000 100 17,000 100 17,000 100 17,000
Trans in 12,000 CWIP 1,000 100 1,000 60 600 40 400

Material 5,000 NL 1,290 100 1,290 100 1,290 100 1,290

AG [890] 100 [890] 100 [890] 100 [890]

18,400 18,400 18,400 18,000 17,800

Transfer these figures to Statement of Cost and Evaluation

 Figures from Statement of Equivalents Units

FA FEB 2021 Q2
Statement of Cost and Evaluation [WAM]
37

Cost Material Add Material Conversion cost Total

RM RM RM RM
Previous Cost + RM4,400 + RM7,000 + RM5,600 +
Current Cost RM60,000 RM20,000 RM30,000
Total EQ units 18,400 18,000 17,800
= Cost per EQ unit = RM3.50 = RM1.50 = RM2.00 RM7.00
Evaluation of:
Finished Goods
FG 17,000 X RM7.00 119,000
Net NL 1,290 x RM7.00 7,224
= NL Value – NL SV =RM9,030
= RM9,030 – RM1,806
= RM7,224
Total ?
AG 890 x RM7.00 6,230
CWIP 1,000 x RM3.50 600 x RM1.50 400 x RM2.00 5,200
=RM =RM =RM
 FA FEB 2021 Q2
38

2c. List of industries

◻ 1. Textiles
◻ 2. Chemicals
◻ 3. Food and beverages
◻ 4. Electricity components
Or any acceptable answers
(names of companies are not acceptable. It should be the industries)
2d.
◻ Normal loss is an expected and unavoidable loss that occurs
under efficient operating condition. Normal loss is treated as
part of the cost of good production unit conditions.
39 FA JULY 2020 Q2
 FA JULY 2020
40
Splitting Process account
Units CPU Total Units CPU Total
RM RM RM RM
Direct Material 2,000 10,500 To Mixing 2,120 17.00 36,040
Process
Direct Labour 19,200 Normal Loss 100 2.00 200

Prod Overhead 2,800

AG 220 17.00 3,740

2,220 36,240 2,220 36,240

Cost per Unit = Total Input Cost – NL Scrap Value

Expected Output Units

= RM32,500 - RM2,000
2,000 - 100 AG = ACTUAL OUTPUT – EXPECTED OUTPUT
= 2,120 – 1,900
= RM17 = 220
 FA JULY 2020
41
Mixing Process account
Units CPU Total Units CPU Total
RM RM RM RM
OWIP 650 9,750 FG 3,680 106,047

Trans From 2,120 36,040 Normal Loss 437 437

Slitting
Direct Material 1,600 32,000 CWIP 120 2,869

Direct Labour 25,200 Abnormal Loss 133 3,637

Prod OH 10,000

4,370 112,990 4,370 112,990

OWIP 650 AL = EXPECTED OUTPUT – ACTUAL OUTPUT

+ TRANS 2,120 = 3,933 – 3,800
+ DM 1,600 = 133
PROD 4,370

NL = 10% x 4,370 = 437

 FA JULY 2020
42
Statement of Equivalent Unit [FIFO]

Input Output Trans-in Direct Material Direct Labour Prod OH

From P1
% Units % Units % Units % Units

OWIP 350 OWIP 650 0 - 0 30 195 40 260

TF P1 2,120 CP 3,030 100 3,030 100 3,030 100 3,030 100 3,030

Material 1,600 NL 437 100 437 100 437 100 437 100 437

AL 133 100 133 100 133 100 133 100 133

CWIP 120 100 120 90 108 80 96 50 60

4,370 4,370 3,720 3,708 3,891 3,920

CP = INPUT – OWIP – NL – AL - CWIP

= 43,700 –650 – 437 – 133 - 120
= 3,030
 FA JULY 2020
Statement of Cost and Evaluation [FIFO]
43 Cost Trans- in D Material D Labour Prod OH Total
RM RM RM RM
Current Cost RM36,040 RM32,000 RM25,200 RM10,000
Total EQ units 3,720 3,708 3,891 3,920
= Cost per EQ unit = RM9.69 = RM8.63 = RM6.48 = RM2.55 RM27.35
Evaluation of:
Finished Goods
a. OWIP b/d 9,750
b. OWIP - 195 x RM6.48 260 x RM2.55 1,896.60
= RM1,263.60 = RM633
c. CP 3,030 x RM27.35
d. Net NL 437 x RM27.35 11,514.95
= NL Value – NL SV =RM11,951.95
= RM11,951.95 – RM437
= RM11,514.95
Total ?
AL 133 x RM27.35 ?
CWIP 120 x RM9.69 108 x RM8.63 96 x RM6.48 60 x RM2.55 ?
44 FE DEC 2019
 FE DEC 2019
45
Moulding Process account
Units CPU Total Units CPU Total
RM RM RM RM
Direct Material 30,000 4.50 135,000 To Drying 25,800 9.20 237,360
Process
Direct Labour 44,250 Normal Loss 4,500 1.20 5,400

Prod Overhead 60,750

AG 300 9.20 2,760

30,300 242,760 30,300 242,760

Cost per Unit = Total Input Cost – NL Scrap Value AG = INPUT – TRANS - NL
Expected Output Units = 30,000 – 25,800 -4,500
= 300
= RM240,000 - RM5,400
30,000 – 4,500 @
AG = ACTUAL OUTPUT - EXPECTED OUTPUT
= 25,800 - 25,500
= RM9.20 = 300
 FE DEC 2019
Drying Process account
46
Units CPU Total Units CPU Total
RM RM RM RM
OWIP 1,500 17,350 FG 22,500 382,606

From Moulding 25,800 9.20 237,360 Normal Loss 1,215 2,430

Add. Material 81,120 Abnormal Loss 585 9,594

Conversion Cost 100,800 CWIP 3,000 42,000

27,300 436,630 27,300 436,630

OWIP 1,500 AL = ACTUAL LOSS - NL

+ TRANS 25,800 = 1,800 – 1,215
- CWIP 3,000 = 585
PROD 24,300
FG = INPUT – NL – AL - CWIP
NL = 5% x 24,300 = 1,215 = 27,300 – 1,215 – 585 – 3,000
= 22,500
 FE DEC 2019
47
Statement of Equivalent Unit [FIFO]
Input Output Trans-in Add Material Conversion
From P1 Cost
% Units % Units % Units
OWIP 1,500 OWIP 1,500 0 0 20 300 40 600
TF P1 25,800 CP 21,000 100 21,000 100 21,000 100 21,000
Material NL 1,215 100 1,215 100 1,215 100 1,215
AL 585 100 585 100 585 100 585
CWIP 3,000 100 3,000 75 2,250 60 1,800
27,300 27,300 25,800 25,350 25,200

Transfer these figures to Statement of Cost and Evaluation

CP = INPUT – OWIP – NL – CWIP- AL

= 27,300 – 1,500 – 1,215 – 3,000 - 585
= 21,000
 Figures to Statement of Equivalent Units

FE DEC 2019
Statement of Cost and Evaluation [FIFO]
48 Cost Trans- in Material Conversion Cost Total
RM RM RM RM
Current Cost RM237,360 RM81,120 RM100,800
Total EQ units 25,800 25,350 25,200
= Cost per EQ unit = RM9.20 = RM3.20 = RM4.00 RM16.40
Evaluation of:
Finished Goods
a. OWIP b/d 17,350
b. OWIP - 300 x RM3.20 600 x RM4.00 3,360
= RM960 = RM2,400
c. CP 21,000 x RM16.40 344,400
d. Net NL 1,215 x RM16.40 17,496
= NL Value – NL SV =RM19,926
= RM19,926 – RM2,430
Total ?
AL 585 x RM16.40 9,594
CWIP 3,000 x RM9.20 2,250 x RM3.20 1,800 x RM4.00 42,000
 FE DEC 2019
49

Characteristic of Process Costing:

◻ Output produce is in large volume, very identical and come from a
continuous flow of processes,
◻ Output of one process becomes the input for the next process,
◻ Process cost centres are set-up and all costs (direct or indirect
costs) incurred during the period are charged to each process, then
a total process costs for each is obtained,
◻ A separate account is kept for each process,
◻ Total process costs of each process are being averaged or shared
equally among the cost units produced in that process during the
period.
◻ Loss or waste may arise during processing
◻ Joint-product or by-product often results from the processes.
 FE DEC 2019
50

◻ TWO (2) methods use in the apportionment of joint cost in

joint product costing.

Physical measurement method

Sales value method
Sales value at split off point method / Net Realisable Value
method
51 FE JUNE 2019
 FE JUNE 2019
52
Mixing Process account
Units CPU Total Units CPU Total
RM RM RM RM
Material 6,500 41,500 Transfer to 6,120 10.00 61,200
Finishing
Labour 15,400 Normal Loss 390 1.00 390

Overhead 4,590

AG 10 100

6,510 61,590 6,510 61,590

Cost per Unit = Total Input Cost – NL Scrap Value Normal Loss
Expected Output Units = 6% x 6,500
= 390 units
= RM61,490 - RM390
6,500 – 390 AG = INPUT – TRANS - NL
= 6,500 – 6,120 - 390
= RM10.00 = 10
 FE JUNE 2019
53
Finishing Process account
Units CPU Total Units CPU Total
RM RM RM RM
OWIP 200 2,800 FG 5,700 92,140

From Mixing 6,120 61,200 Normal Loss 280 2.00 560

Material 680 19,800 CWIP 1,000 13,300

Labour 16,250 Abnormal Loss 20 310

Overhead 6,260
7,000 106,310 7,000 106,310
Normal Loss AL =ACTUAL LOSS - NL
= 4% X [200 + 6,120 + 680] = 300 - 280
= 280 units = 20

FG = INPUT – NL – CWIP - AL
= 7,000 - 280 – 1,000 - 20
= 5,500
 FE JUNE 2019
54
Statement of Equivalent Unit [FIFO]
Input Output Trans-in Material Labour OH
From P1
% Units % Units % Units % Units
OWIP 200 OWIP 200 0 0 0 0 50 100 30 60
TF P1 6,120 CP 5,500 100 5,500 100 5,500 100 5,500 100 5,500
Material 680 NL 280 100 280 100 280 100 280 100 280
AL 20 100 20 100 20 100 20 100 20
CWIP 1,000 100 1,000 80 800 60 600 40 400
7,000 7,000 6,800 6,600 6,500 6,260

CP = INPUT – OWIP – NL – CWIP- AL

= 7,000 -200 – 280 – 1,000 - 20
= 5,500
 FE JUNE 2019
Statement of Cost and Evaluation [FIFO]
55
Cost Trans- in Material Labour OH Total
RM RM RM RM RM
Current Cost RM61,200 RM19,800 RM16,250 RM6,260
Total EQ units 6,800 6,600 6,500 6,260
= Cost per EQ unit = RM9 = RM3 = RM2.50 = RM1 RM15.50
Evaluation of:
Finished Goods
a. OWIP b/d 2,800
b. OWIP - - 100 x RM2.50 60 x RM1 310
=RM250 = RM60
c. CP 5,500 x RM15.50 85,250
d. Net NL 280 x RM15.50 3,780
= NL Value – NL SV =RM4,340
= RM4,340 – RM560
Total ?
AL 20 x RM15.50
CWIP 1,000 x RM9 800 x RM3 600 x RM2.50 400 x RM1 13,300
 FE JUNE 2019
56

◻ Joint product - Joint product refers to two or more products that

are produced in the same processing operation, emerging from
the same raw materials input. They have their own substantial value such
that no single product can be regarded as a single product.
◻ By-product - by-product is a product incidentally produced in
producing the main product. lt has lower sales value as compared
with the main product.

◻ Classify the following items into a normal loss or

abnormal loss
Evaporation of material during process – Normal loss
Loss due to the inefficient working of new employees -
Abnormal loss
Unexpected defect of material - Abnormal loss
Unavoidable loss of material - Normal loss
57 FE DEC 2018
 FE DEC 2018
58
Process A account
Units CPU Total Units CPU Total
RM RM RM RM
Direct Material 10,000 6.95 69,500 FG to Process B 9,850 13.00 128,050

Direct Labour 45,000 Normal Loss 500 0 0

Overhead 9,000

AG 350 4,550

10,350 128,050 10,350 128,050

Cost per Unit = Total Input Cost – NL Scrap Value

Expected Output Units

= RM123,500 AG = INPUT – FG - NL
10,000 – 500 = 10,000 – 9,850 - 500
= 350
= RM13.00
 FE DEC 2018
59
Process B account
Units CPU Total Units CP Total
RM RM U RM
RM
OWIP 2,500 30,000 FG 24,460 375,333

From Process 9,850 13.00 128,050 Normal Loss 1,370 0.50 685
A
Material 15,760 151,500 CWIP 1,800 20,880

Labour 78,630 Abnormal Loss 480 7,008

Overhead 15,726
28,110 403,906 28,110 403,906
AL = INPUT – FG – NL - CWIP
= 28,110 – 24,460 – 1,370 – 1,800
= 480
 FE DEC 2018
60
Statement of Equivalent Unit [FIFO]
Input Output Input Add Labour OH
Material Material
% Units % Units % Units % Units

OWIP 2,500 OWIP 2,500 0 - 0 - 60 1,500 60 1,500

TF P1 9,850 CP 21,960 100 21,960 100 21,960 100 21,960 100 21,960
Material 15,760 NL 1,370 100 1,370 100 1,370 100 1,370 100 1,370
AL 480 100 480 100 480 100 480 100 480
CWIP 1,800 100 1,800 80 1,440 50 900 50 900
28,110 28,110 25,610 25,250 26,210 26,210

CP = INPUT – OWIP – NL – CWIP- AL

= 28,110 – 2,500 – 1,370 – 1,800 - 480
= 21,960
 FE DEC 2018
Statement of Cost and Evaluation [FIFO]
61
Cost Material Add Material Labour OH Total
RM RM RM RM RM
Current Cost RM128,050 RM151,500 RM78,630 RM15,728
Total EQ units 25,610 25,250 26,210 26,210
= Cost per EQ unit = RM5 = RM6 = RM3 =RM0.60 RM14.60
Evaluation of:
Finished Goods
a. OWIP b/d 30,000
b. OWIP - - 1,500 x RM3 1,500 x RM0.60 5,400
=RM = RM
c. CP 21,960 x RM14.60 320,616
d. Net NL 1,370 x RM14.60 19,317
= NL Value – NL SV =RM20,002
= RM20,002 – RM685
Total ?
AL 480 x RM14.60 7,008
CWIP 1,800 x RM5 800 x RM3 600 x RM2.50 400 x RM1 20,880
 FE DEC 2018
62

◻ Two causes of abnormal loss:

1. Carelessness
2. Rough handling of material
3. Lack of proper knowledge/expertise
4. Low quality of raw materials
5. Machine breakdown
6. Accident in factory area
63 FE JUNE 2018
 FE JUNE 2018
64
Process A account
Units CPU Total Units CPU Total
RM RM RM RM
Direct Material 8,000 30.00 240,000 FG to Process B 7,000 50.00 350,000

Direct Labour 80,000 Normal Loss 400 10.00 4,000

Overhead 64,000 Abnormal Loss 600 50.00 30,000

8,000 384,000 8,000 384,000

Cost per Unit = Total Input Cost – NL Scrap Value

Expected Output Units

= RM384,000 – RM4,000 AL = INPUT – TRANS - NL

8,000 – 400 = 8,000 – 7,000 - 400
= 600
= RM50.00
 FE JUNE 2018
65
Process B account
Units CPU Total Units CP Total
RM RM U RM
RM
OWIP 1,000 54,740 FG 7,000 491,940

From Process A 7,000 350,000 Normal Loss 400 4,000

Material 69,600 CWIP 800 49,440

Conversion Cost 57,440

Abnormal Gain 200 13,600

8,200 545,380 8,200 545,380

CWIP = OWIP + Trans in +AG – FG – NL Expected Loss/NL = 400

= 1,000 + 7,000 + 200 – 7,000 – 400 Actual Loss/Scrap = 200
= 800 EL > AL = Abnormal Gain
 FE JUNE 2018
66
Statement of Equivalent Unit [FIFO]
Input Output TFPA Material Conversion
Cost
% Units % Units % Units
OWIP 1,000 OWIP 1,000 0 - 20 200 50 500
TF PA 7,000 CP 6,000 100 6,000 100 6,00 100 6,000
Material NL 400 100 400 100 400 100 400
CWIP 800 100 800 70 560 60 480

AG [200] 100 [200] 100 [200] 100 [200]

8,000 8,000 7,000 6,960 7,180

CWIP = OWIP + Trans in +AG – FG – NL

= 1,000 + 7,000 + 200 – 7,000 – 400
= 800
 FE JUNE 2018
Statement of Cost and Evaluation [FIFO]
67 Cost TFPA Material Conversion Cost Total
RM RM RM RM
Current Cost RM350,000 RM69,600 RM57,440
Total EQ units 7,000 6,960 7,180
= Cost per EQ unit = RM50 = RM10 = RM8 RM68.00
Evaluation of:
Finished Goods
a. OWIP b/d 54,740
b. OWIP - 200 x RM10 500 x RM8 6,000
= RM2,000 =RM4,000
c. CP 6,000 x RM68.00 408,000
d. Net NL 400 x RM68.00 23,200
= NL Value – NL SV =RM37,200
= RM27,200 – RM4,000
Total ?
AG 200 x RM68.00 13,600
CWIP 800 x RM50 560 x RM10 480 x RM8.00 49,440
 FE JUNE 2018
68

◻ FOUR (4) characteristics of process costing:

Produce similar or homogenous products
Produce goods to meet sales demand and not for custom-made orders
Used in mass production.
Output from one process will be the input in the next process.

◻ Normal losses are inherent in the production process and cannot be

eliminated.
◻ These losses occur under efficient operating conditions and are
unavoidable.
◻ Abnormal losses are not an inherent part of the production process
and arise from inefficiencies. They are avoidable losses and treated
as a period cost and written off to the profit and loss account at end
of the accounting period.
69 FE JAN 2018
 FE JAN 2018
70
Cooking Process account
Units CPU Total Units CPU Total
RM RM RM RM
Direct Material 10,000 55,000 Transfer to 8,500 9.30 79,050
Packaging
Additional 9,900 Normal Loss 1,000 1.20 1,200
Material
Conversion Cost 20,000 Abnormal Loss 500 4,650

10,000 84,900 10,000 84,900

Cost per Unit = Total Input Cost – NL Scrap Value

Expected Output Units

= RM84,900 – RM1,200
AL = INPUT – TRANS - NL
10,000 – 1,000 = 10,000 – 8,500 – 1,000
= 500
= RM9.30
 FE JAN 2018
71
Packaging Process account
Units CPU Total Units CPU Total
RM RM RM RM
From Cooking 8,500 9.30 79,050 FG 7,100 77,872

Additional 3,360 Normal Loss 780 1.50 1,170

Material
Conversion Cost 5,908 CWIP 1,200 12,108

OWIP 500 2,000

Abnormal Gain 80 10.40 832

9,080 91,150 9,080 91,150

Expected Loss/NL =
AG = FG + NL + CWIP – TRANS - OWIP
Actual Loss/Scrap = 700
= 7,100 + 780 + 1,200 – 8,500 – 500
EL > AL = Abnormal Gain
= 80
 FE JAN 2018
72
Statement of Equivalent Unit [FIFO]
Input Output TFPA Material Conversion
Cost
% Units % Units % Units
OWIP 500 OWIP 500 0 - 40 200 60 300
TF C 8,500 CP 6,600 100 6,600 100 6,600 100 6,600
Material NL 780 100 780 100 780 100 780
CWIP 1,200 100 1,200 75 900 70 840

AG [80] 100 [80] 100 [80] 100 [80]

9,000 9,000 8,500 8,400 8,440

CP = INPUT – OWIP – NL –CWIP - AG

= 9,000 – 500 – 780 1,200 - -80
= 6,600
 FE JAN 2018
Statement of Cost and Evaluation [FIFO]
Cost TFC Material Conversion Cost Total
73 RM RM RM RM
Current Cost RM79,050 RM3,360 RM5,908
Total EQ units 8,500 8,400 8,440
= Cost per EQ unit = RM9.30 = RM0.40 = RM0.70 RM10.40
Evaluation of:
Finished Goods
a. OWIP b/d 2,000
b. OWIP - 200 x RM0.40 300 x RM0.70 290
= RM80 =RM210
c. CP 6,600 x RM10.40 68,640
d. Net NL 780 x RM10.40 6,942
= NL Value – NL SV =RM8,112
= RM8,112 – RM1,170
=RM6,942
Total 77,871
AG 80 x RM10.40 832
CWIP 1,200 x RM9.30 900 x RM0.40 840 x RM0.70 12,108
 FE JAN 2018
74

◻ FOUR (4) methods of allocating joint costs:

Physical measures method
Sales Value at Split-off Point method
Net Realizable Value method
Constant Gross Profit Percentage method

◻ Distinguish between normal loss and abnormal loss:

Normal losses are unavoidable losses that are inherent to
the production process whereas abnormal losses are
avoidable losses and are not an inherent part to the
production process.
75 FE MARCH 2017
 FE MARCH 2017
76
Process 1 account
Units CPU Total Units CPU Total
RM RM RM RM
Direct Material 70,000 9.00 630,000 Trans to Process 60,000 15.50 930,000
2
Direct Labour 203,000 Normal Loss 7,000 0 0

Direct Expenses 38,500 Abnormal Loss 3,000 15.50 46,500

Overhead 105,000

70,000 976,500 70,000 976,500

Cost per Unit = Total Input Cost – NL Scrap Value

Expected Output Units

= RM976,000 – RM0
70,000 – 7,000
AL = INPUT – TRANS - NL
= RM15.50
= 70,000 – 60,000 – 7,000
= 3,000
 FE MARCH 2017
77
Process 2 account
Units CPU Total Units CPU Total
RM RM RM RM
OWIP 7,000 76,000 FG 60,000 1,206,990

Trans from 60,000 15.50 930,000 CWIP 12,000 223,320

Process 1
Direct Labour 186,480

Direct Expenses 29,600

Overhead 103,230

Abnormal Gain 5,000 105,000

72,000 1,430,310 72,000 1,430,310

AG = FG + CWIP – OWIP - TRANS

= 60,000 + 12,000 – 7,000 - 60,000 = 5,000
 FE MARCH 2017
Statement of Equivalent Unit [FIFO]
78

Input Output TFP1 Direct Direct Overheads

Labour Expenses
% Units % Units % Units % Units
OWIP 7,000 OWIP 7,000 0 - 40 2,800 40 2,800 60 4,200
TF P1 60,000 CP 53,000 100 53,000 100 53,000 100 53,000 100 53,000

CWIP 12,000 100 12,000 70 8,400 70 8,400 30 3,600

AG [5,000] 100 [5,000] 100 [5,000] 100 [5,000] 100 [5,000]

67,000 67,000 60,000 59,200 59,200 55,800

CP = INPUT – OWIP – CWIP - AG

= 67,000 – 7,000 – 12,000 - 5,000 =
53,000
 FE MARCH 2017
Statement of Cost and Evaluation [FIFO]
79 Cost TFP1 Direct Direct Overhead Total
RM Labour Expenses RM
RM RM
Current Cost RM930,000 RM186,480 RM29,600 RM103,230
Total EQ units 60,000 59,200 59,200 55,800
= Cost per EQ unit = RM15.50 = RM3.15 = RM0.50 = RM1.85 RM21.00
Evaluation of:
Finished Goods
a. OWIP b/d 76,000
b. OWIP - 2,800 x 2,800 x RM0.50 4,200 x 17,990
RM3.15 =RM1,400 RM1.85
= RM8,820 = RM7,770
c. CP 53,000 x RM21.00 1,113,000
Total ?
AG 5,000 x RM21.00 105,000
CWIP 12,000 x RM15.50 8,400 x RM3.15 8,400 x RM0.50 3,600 x RM1.85 223,320
=RM186,000 =RM5,600 =RM4,200 = RM6.660
 FE MARCH 2017
80

◻ The formula to estimate normal loss based on the following

estimation:
Percentage of input :
Estimated loss % x Quantity of materials
◻
Percentage of production :
Estimated loss % x (OWIP Quantity + Quantity of materials –
CWIP Quantity)

◻ The treatment for by-products.

By product value should not be included in the apportionment of
joint cost (to be deducted from production costs) due to the
insignificant value of by product √ as compared to joint product.
81 FE OCT 2016
 FE OCT 2016
Cutting Department Process account
82

Units CPU Total Units CPU Total

RM RM RM RM
Direct Material 4,500 40.00 180,000 Trans to 4,200 80.00 336,000
Assembly
Process
Direct Labour 81,000 Normal Loss 225 7.00 1,575

Direct 33,975 Abnormal Loss 75 80.00 6,000

Expenses
Overhead 48,600

4,500 343,575 4,500 343,575

Cost per Unit = Total Input Cost – NL Scrap Value

Expected Output Units

= RM343,575 – RM1,575 AL = INPUT – TRANS - NL

4,500 - 225 = 4,500 – 4,200 - 225
= 75
= RM80.00
 FE OCT 2016
Assembly Department Process account
83

Units CPU Total Units CPU Total

RM RM RM RM
OWIP 800 132,240 FG 4,285 596,219

Trans from Cutting 4,200 80.00 336,000 CWIP 540 67,446

Process
Added Material 86,500 Normal Loss 223 15.00 3,345

Direct Labour 63,606

Overhead 42,280

Abnormal Gain 48 6,384

5,048 667,010 5,048 667,010

PROD = OWIP + TRANS - CWIP AG = FG + CWIP – OWIP - TRANS

= 800 + 4.200 - 540 = 4,285 + 540 – 800 – 4,200
= 4,460 = 48
NL = 5% X 4,460 = 223
 FE OCT 2016
84
Statement of Equivalent Unit [WAM]
Input Output Material Add Direct Overheads
Material Labour
% Units % Units % Units % Units
OWIP 800 FG 4,285 100 4,285 100 4,285 100 4,285 100 4,285

Trans in 4,200 CWIP 540 100 540 100 540 70 378 70 378

NL 223 100 223 100 223 100 223 100 223

AG [48] 100 [48] 100 [48] 100 [48] 100 [48]

5,000 5,000 5,000 5,000 4,838 4,838

 FE OCT 2016
Statement of Cost and Evaluation [WAM]
85 Cost Material Add Direct Labour Overhead Total
RM Material RM RM
RM
Previous Cost + RM64,000 RM43,500 + RM18,640 + RM6,100 + RM
Current Cost +RM336,000 RM86,500 RM63,606 42,280
Total EQ units 5,000 5,000 4,838 4,838 RM133.00
= Cost per EQ unit = RM80.00 = RM26.00 = RM17.00 = RM10.00
Evaluation of:
Finished Goods
FG 4,285 X RM133.00 569,905
Net NL 223 x RM133.00 26,314
= NL Value – NL SV
= RM29,659 – RM3,345 =RM29,659
=RM26,314
Total ?
AG 48 x RM133.00 6,384

CWIP 540 x RM80.00 540 x RM26.00 378 x RM17.00 378 x RM10.00 67,446
=RM =RM =RM = RM
 FE OCT 2016
86

◻ FOUR (4) characteristics of process costing:

i. Accumulation of costs to each process
ii. Products consist of like units, identical.
iii. Product cost is an average cost.
iv. Costs are computed for each process at the end of the
process.
◻ Difference between waste and spoiled work:
Waste - discarded substance having no value.
Spoiled work - output of a process which does not meet
quality standard.
87 FE MARCH 2016
 FE MARCH 2016
88
Process 1 account
Units CPU Total Units CPU Total
RM RM RM RM
Direct Material 16,000 2.50 40,000 Trans to Process 15,500 7.40 114,700
2
Direct Labour 40,000 Normal Loss 800 0.80 640

Direct Expenses 30,000

Overhead 3,120

Abnormal Gain 300 7.40 2,220

16,300 115,340 16,300 115,340

Cost per Unit = Total Input Cost – NL Scrap Value

Expected Output Units
AG = TRANS + NL - INPUT
= RM113,120 – RM640 = 15,500 + 800 – 16,000
16,000 – 800 = 300
= RM7.40
 FE MARCH 2016
Process 2 account
89
Units CPU Total Units CPU Total
RM RM RM RM
OWIP 800 39,111 FG 15,000 195,081

Trans from 15,500 7.40 114,700 Normal Loss 632 1.00 632
Process 1
Direct Labour 20,800 CWIP 500 5,295

Overhead 20,800 Abnormal 168 2,103

Loss
16,300 203,111 16,300 203,111

PROD = OWIP + TRANS - FG - CWIP

AL = OWIP + TRANS – FG – NL - CWIP
= 800 + 15,00 – 15,000 - 500
= 800 + 15,500 – 15,000 – 632 - 500
= 15,800
= 168
NL = 4% X 15,800 = 632
 FE MARCH 2016
Statement of Equivalent Unit [WAM]
90

Input Output Trans in Direct Labour Overheads

% Units % Units % Units
OWIP 800 FG 15,000 100 15,000 100 15,000 100 15,000

Trans in 15,500 CWIP 500 100 500 60 300 40 200

NL 632 100 632 100 632 100 632

AL 168 100 168 100 168 100 168

16,300 16,300 16,300 16,100 16,000

 FE MARCH 2016
Statement of Cost and Evaluation [WAM]
91

Cost Trans in Direct Labour Conversion C Total

RM RM RM RM
Previous Cost 24,991 + 6,920 + 7,200 +
+ Current Cost 114,700 28.500 20,800
= Total Cost Incurred 139,691 35.420 28,000
Total Cost Incurred RM139,691 RM35,420 RM28,000
Total EQ units 16,300 16,100 16,000
= Cost per EQ unit = RM8.57 = RM2.20 RM1.75 RM12.52
Evaluation of:
Finished Goods: 15,000 x RM12.52 187,800
Completed Unit
Net NL 632 x RM12.52 7,281
= NL Value – NL SV =RM7,916
= RM7,913 – RM632
=RM7,281
Total ?
CWIP 500 x RM8.57 300 x RM2.20 200 X RM1.75 5,295
= RM4,285 = RM660 =RM 350
AL 168 x RM12.52 2,103
 FE MARCH 2016
92 JOB COSTING PROCESS COSTING
1. Used in industries where many different Used in industries where the products are
jobs are produced at the end of the homogeneous (i.e. more or less
production. identical/uniform).

2. Many different jobs are worked on during Products are produced in a continuous
each period. Product is recognized by basis. Flow of units is more or less
job or batch. continuous.

3. Units of product are distinguishable. Units are indistinguishable as all units

produced are identical.

4. Costs are accumulated by individual job. Costs are accumulated by departments /

processes.

5. Use job cost sheet. Use department production report.

Abnormal loss
Abnormal losses are losses that are not inherent in the production. It
can be avoided and eliminated. These losses are not expected and
would not occur under efficient operating conditions.
93 FE SEPT 2015
 FE SEPT 2015
94
Mixing Process account
Units CPU Total Units CPU Total
RM RM RM RM

Direct Material 180,000 360,000 Trans to 160,000 3.15 504,000

Colouring
Process
Add Material 20,000 77,150 Normal Loss 20,000 0

Direct Wages 107,850 Abnormal Loss 20,000 63,000

Prod Overhead 22,000

200,000 567,000 200,000 567,000

NL = 10% X INPUT
Cost per Unit = Total Input Cost – NL Scrap Value = 10% X 200,000
Expected Output Units = 20,000

= RM567,000 – RM0
AL = INPUT – TRANS – NL
200,000 – 20,000 = 200,000 – 160,000 – 20,000
= RM3.15 = 20,000
 FE SEPT 2015
95
Colouring Process account
Units CPU Total Units CPU Total
RM RM RM RM

OWIP 8,000 34,000 FG 120,000 797,750

Trans from 160,000 3.15 504,000 CWIP 35,000 171,500

Mixing Process
Add Material 80,000 NL 13,000 1.00 13,000

Conversion Cost 364,250

168,000 982,250 168,000 982,250

 FE SEPT 2015
96
Statement of Equivalent Unit [FIFO]
Input Output Material Add Material Conversion
Cost
% Units % Units % Units
OWIP 8,000 OWIP 8,000 0 - 0 - 40 3,200
Trans in 160,000 CP 112,000 100 112,000 100 112,000 100 112,000

CWIP 35,000 100 35,000 100 35,000 50 17,500

NL 13,000 100 13,000 100 13,000 100 13,000

168,000 168,000 160,000 160,000 145,700

CP = INPUT – OWIP – CWIP - NL

= 168,000 – 8,000 – 35,000 – 13,000
= 112,000
 FE SEPT 2015
Statement of Cost and Evaluation [FIFO]
97 Cost Material Add Material Conversion Cost Total
RM RM RM RM
Current Cost RM504,000 RM80,000 RM364,250
Total EQ units 160,000 160,000 145,700
= Cost per EQ unit = RM6.15 = RM0.50 = RM2.50 RM6.15
Evaluation of:
Finished Goods
a. OWIP b/d 34,000
b. OWIP - - 3,200 x RM2.50 8,000
c. CP 112,000 x RM6.15 688,800
Net NL 13,000 x RM6.15 = RM79,950 66,950
= RM79,950 – RM13,000
= RM66,960
Total ?
CWIP 35,000 x RM6.15 35,000 x RM0.50 17,500 x RM2.50 171,500
=RM110,250 =RM17,500 =RM43,750
 FE SEPT 2015
98

◻ Four (4) possible reasons of having losses:

Waste –material residue that has no value at all. They are uncontrollable
losses
Scrap –material residue or a left-over parts of raw materials usually
insignificant in quantity and has minor sales value.
Spoiled work – output of a process that failed to meet the quality standard. It
can be sold without further process.
Defective units- Similar to spoiled work but can be rectify to bring it back to
the quality standard desire.

◻ Distinguish methods of calculating OWIP values.

FIFO- it is assumed that OWIP is the first group of units to be processed and
completed during the current period
Average cost- One may assumed that OWIP is inextricably merged with the
unit produced in the current period and can no longer be identified
separately
99 FE MARCH 2015
 FE MARCH 2015
Finishing Department Process account
100

Units CPU Total Units CPU Total

RM RM RM RM

OWIP 500 2,500 FG 6,300 6.47 40,790

Trans from 5,950 29,450 CWIP 300 1,731

Assembly
Add Material 250 3,726 Abnormal 100 655
Loss
Conversion 7,500
Cost
6,700 43,176 6,700 43,176
AL = No expected loss [NL]
Cost per Unit = Total Input Cost – NL Scrap Value
however rejected units is 100
Expected Output Units
= 100
= RM40,790 – RM0
FG = INPUT – CWIP - AL
6,300 = 6,700 – 300 - 100
= RM6.47 = 6,300
 FE MARCH 2015
101
Statement of Equivalent Unit [FIFO]
Input Output Trans in Material Conversion
Cost
% Units % Units % Units
OWIP 500 OWIP 500 0 - 20 100 40 200
Trans in 5,950 CP 5,800 100 5,800 100 5,800 100 5,800

Add 250 CWIP 300 100 300 70 210 50 150

Material
AL 100 100 100 100 100 100 100

6,700 6,700 6,200 6,210 6,250

CP = INPUT – OWIP – CWIP - AL

= 6,700 – 500 – 300 -100
= 5,800
 FE MARCH 2015
Statement of Cost and Evaluation [FIFO]
102 Cost Trans in Material Conversion Cost Total
RM RM RM RM
Current Cost RM29,450 RM3,726 RM7,500
Total EQ units 6,200 6,210 6,250
= Cost per EQ unit = RM4.75 = RM0.60 = RM1.20 RM6.55
Evaluation of:
Finished Goods
a. OWIP b/d 2,500
b. OWIP - 60 240 300
c. CP 112,000 x RM6.55 37,990
Total ?
CWIP 300 x RM4.75 210 x RM0.60 150 x RM1.20 1,731
=RM =RM =RM
AL 100 x RM6.55 655
 FE MARCH 2015
103

Abnormal Loss account

Units CPU Total Units CPU Total
RM RM RM RM
Finishing 100 6.55 655 Cash 100 100
Process SOPL 555
100 655 100 655
 FE MARCH 2015
104

Process Costing Job Costing

Products Similar product or Each job is different
batches of similar from one another.
products.
Production Process Products go through Each job may be
the same series of completed through
production process. different process.
Computation Cost of each product is Job cost is computed
of cost per unit the total unit cost from by tracking the
all process. production of each
order.
a. Two reasons for apportioning joints costs:
i. For profit determination
ii. For stock valuation