CMA Study Group

 View Only

  • 1.  EUP - Process costing

    Posted 05-01-2023 10:04 PM
    Sweetums Syrup adds raw materials costs at the beginning of its manufacturing process and incurs conversion costs uniformly throughout the process. At the beginning of last month, Sweetums had 20,000 units that were 40% complete in its Beginning Work-in-Process Inventory. Over the course of the month, the company began production of 150,000 units; at month's end, 90,000 units were finished and transferred out, while the remaining units were 90% complete. Using the Weighted Average method, what was Sweetums' equivalent units of production for conversion costs for the month?
    A : 162000 
    My understanding is 150000 includes 20000 Beginning wip so unit started will be 130000
    E.wip = 20,000+130000 - 90,000 = 60,000
    under weighted average EUP (Beg. Wip + unit started +( E.wip*90%))
    20,000+130000 + (60000*90%) = 204000 EUP

    Please someone explain where I am wrong.

    Thanks
    Kirti


  • 2.  RE: EUP - Process costing

    Posted 05-02-2023 01:11 AM

    Bwip 20000 + started 150000 = completed 90000 + ewip 80000

                                    Conversion 

    Completed      .             90000
    Ewip.  90%                      72000
                            .               ________
    Eup.                   .            162000



    ------------------------------
    Bilal Mohammad
    Accountant
    Abudhabi
    United Arab Emirates
    ------------------------------



  • 3.  RE: EUP - Process costing

    Posted 05-02-2023 01:35 AM

    BB + started = EB + completed 
    20,000 + 150,000 = 80,000 + 90,000

    EUP :                             Conversion cost
    Completed                             90,000 
    EB WIP ( 80,000 x 90% )       72,000 
    ------------------------------- = 162,000

    This is very important topic, maybe in exam you got essays question to calculate process costing,
    any questions contact me through whatsapp 00962796770697



    ------------------------------
    Ahmad Altork
    Supervisor
    Amman
    Jordan
    ------------------------------



  • 4.  RE: EUP - Process costing

    Posted 05-02-2023 02:19 AM

    Units S&C=units transferred-beg wip or, =units started-ending wip. 90000-20000=70000, 
    70000=150000-ending wip, so ending wip will be 150000-70000=80000, CC: ending wip=80000*90%= 72000
    so EUP for CC- beginning wip 20000,S&C-70000 ending wip- 72000= 162000 



    ------------------------------
    Ziaur Rahman
    Executive Officer
    Singapore
    Singapore
    ------------------------------



  • 5.  RE: EUP - Process costing

    Posted 05-02-2023 02:20 AM

    Beginning WIP= 20,000

    Unit started= 150,000

    Units transferred out= 90,000

    Units started and completed= units transferred out- beg WIP i.e. 90,000-20,000 = 70,000

    Ending WIP= beg WIP+ units started - units transferred out i.e., 20,000+150,000- 90,000=80,000

    Therefore, according to weighted average method:
    Beg WIP (100%) =20,000
    Units started and completed= 70,000
    End WIP (90%) = 80,000× 90%= 72,000

    And, EUP= 162,000 (20,000+70,000+72,000)



    ------------------------------
    Diksha Kumari
    Student
    Deoghar
    India
    ------------------------------



  • 6.  RE: EUP - Process costing

    Posted 05-02-2023 10:24 AM

    Hello,
    Please note in this, you must begin with formula to calculate EUP.
    BWIP + Units Started/Transferred = Units Completed + EWIP
    Plug the numbers in the question on this formula to calculate the EWIP since that was not given:
    Therefore,  20,000 +150,000 = 90,000 + EWIP, So EWIP will be 80,000.

    Remember, that to calculate EUP using weighted average method, BWIP is omitted and only the units Completed and EWIP that is 90% complete will be included in your calculation.

    As a result, 90,000 + (80,000 × 90%) = 162,000 units will be the EUP under weighted average method.

    Thank you and hope this helps. Otherwise maybe someone could help to better respond.



    ------------------------------
    [P. Drammeh]
    Somers, CT
    United States
    ------------------------------



  • 7.  RE: EUP - Process costing

    Posted 05-02-2023 10:49 AM

    EUP formula you have used for WAM is incorrect in terms of using beginning inventory. And also 150000 units does not include 20000 beginning inventory, as the fact pattern says, "over the course of the month, company began production of 150000 units". See my calculation below

    EWIP = 20000+150000-90000=80000
    EUP   = Units Completed + EWIP*%Complete
              = 90000 + 80000*0.9
              = 162000

    Thanks



    ------------------------------
    Raju Kesarapu
    Solutions Manager
    Austin TX
    USA
    ------------------------------



Related Content