MGT402 GDB Spring 2019 Solution & Discussion

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Process Costing System
AB manufacturers have three departments: molding, machining and finishing departments. You are given the following data of its machining department for the month of June 2019:
Machining department received 1,000 units from molding department with a certain accumulated cost up till 1st June 2019 and it has 200 partially completed units which are complete as to 90% with respect to direct material, 75% with respect to direct labor and 60% with respect to FOH costs. On 30thJune, 1,200 units have been transferred to the finishing department.
The costs incurred in the machining department are Rs.60,000 for direct material, 36,000 for direct labor and 22,000 for FOH. The costs incurred on opening inventories of work in process are 8,000, 5,000 and 3,000 for material, labor and FOH respectively.
Compute and determine the following
  1. Equivalent units produced under FIFO;
  2. Per unit cost using FIFO;
  3. Cost incurred on opening WIP during June 2019; &
  4. Cost incurred on Units put in to process during the month of June.
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MGT402 GDB Solution Spring 2019

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MGT402 GDB Solution Spring 2019

Cost of Production Report of

AB manufacturers


  1. Calculation of Equivalent Units Produced of FIFO method.


Opening WIP

During/Current completed period units

Total Units














  1. Per unit cost using FIFO

Direct Material                      Rs 60,000/1100  =  54.54

Direct Labor                          Rs 36,000/950    =  37.89

Direct FOH                            Rs 22,000/800    = 27.5

Total                                                                  = 119.93


  1. Cost of Apportionment/Accounting Treatment, Cost incurred on opening WIP during

     June 2019 FIFO

Cost already incurred on opening WIP                                     = Rs 16000

Direct Material  1000 x 90/100 = 900 x   54.54                        = Rs 49086

Direct Labor      1000 x 75/100 = 750 x   37.89                        = Rs 28417.5

FOH                  1000 x 60/100  = 600 x   27.5                          =Rs  16500

Total                                                                                           =Rs 110003.5

Cost of units put into the process during the period

 200x 119.93                                                                               = 23986



Cost of Accumulated profit in the process

Direct Material  (8000   +  60000)      = 68000           

Direct Labor     ( 5000   +  36000)      = 41000

FOH                  ( 3000   +  22000)     =  25000


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GDB MGT402 Solution


GDB MGT402 Solution


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