Question

Campo Company Process Costing Exercise

Campo Company uses a process costing system. On March 1, it had no work-in-process inventory. During the month it started 1,020,000 liters of product and shipped 960,000 liters to its upstream distribution partner. The cost of the resources used by Campo in March amounted to $408,330 direct materials and $1,521,370 conversion costs.

The production supervisor estimates that the ending work in process is 40% complete on March 31.

Determine (a) cost of product shipped and (b) the cost of March 31 ending work-in-process. You should assume that materials and conversion costs are added uniformly throughout process and that there is no need to account for waste/scrap/spoilage.

Answer 1

Process Account
Particulars	Qty	Rate	Amount	Particulars	Qty	Rate	Amount
Material Purchased	1020000		408330	Material Sold	960000	1.89	1816188
Conversion Cost			1521370	Closing WIP 40% Complete	24000	1.89	45360
			1929700
Cost of Production =	Cost of Resources + Conversion Cost / Qty Introduced
	1.89	per ltr
Cost of Good Sold	Qty sold x Cost of production / kg
	1816188
WIP Qty	60000	Ltrs
Completion stage	40%
Equivalent Completed units	24000
Since the Material and conversion cost are distributed evenly
We can say that 24000 units are Equavalent Production considering
Material as well as Conversion Cost
Cost per unit	1.89
Cost of WIP	45360