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% completed 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.

Question

1. 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%.
2. 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)

Answer rating: 100% (QA)

Answer To solve this problem we need to calculate the equivalent units of production for materials a... View the full answer