# Formula of Conversion Cost in Process Costing - Excel

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```					            Name:                                                                     Date:
Instructor:                                                                 Course:
Managerial Accounting, Second Edition by James Jiambalvo
Solving Managerial Accounting Problems Using Microsoft Excel
for Windows Templates by Rex A Schildhouse
Problem P3-1 Comprehensive Problem, One Department
Regal Polish manufactures a single product in one department and uses a process costing system. At the start of May,
there were 5,000 units in process that were 100 percent complete with respect to direct materials and 50 percent
complete with respect to conversion costs (labor and overhead). During the month, the company began production on
100,000 units and ending Work in Process Inventory consisted of 2,000 units that were 100 percent complete with
respect to material and 80 percent complete with respect to conversion costs.
Cost Information:             Beginning Work in Process        Costs Added in May
Direct material                                    \$3,000                       \$65,250
Direct labor                                        125                          6,151
Manufacturing overhead                              175                          7,147
Total:                                             \$3,300                       \$78,548

Required:
Part a . Calculate the cost per equivalent unit for each of the three cost items and in total.
The company started the month with 5,000 units and 100,000 units were entered into production. Thus, the company
must account for 105,000 units. At the end of the month, the company had 2,000 units in ending work in process. This
implies that 103,000 units were completed (105,000 - 2,000).

The denominators for the calculations of cost per equivalent are:

Equivalent
Units
Units             Total
Completed
in Ending WIP
Material          Amount        Amount           Formula
Labor             Amount        Amount           Formula
Overhead          Amount        Amount           Formula

Beginning
Cost Added            Total       Denominator Cost per EU
WIP
Material       Amount      Amount              Formula        Amount       Formula
Labor          Amount      Amount              Formula        Amount       Formula
Overhead       Amount      Amount              Formula        Amount       Formula
Total        Formula     Formula             Formula                     Formula

Part b . Calculate the cost of units completed in May and the cost of ending Work in Process.

Cost of items in ending work in process:
Title                                                          Amount
Title                                                          Amount
Title                                                          Amount
Total                                                          Formula

Part c . Reconcile the sum of the two costs in part b to the sum of beginning Work in Process and costs added in May.

Title                                            Amount
Title                                            Amount
Total                                            Formula

Title                                            Amount
Title                                            Amount
Total                                            Formula

FileName: 5cb3811f-e326-4310-85b1-3eb75e1605d3.xls, Tab: Problem P3-1, Page 1 of 2, 4/23/2011, 1:29 AM
Instructions for the Microsoft Excel Templates

Detail and information on Excel is contained within the manual.

Striking the "F1" key or following the path "Windows>Excel Help" will invoke the Office Assistant
and bring up one of several help menus.

Type your name into the cell "D5". This will be copied by formula to the rest of the pages as required.

Type the due date of your problem into cell "I5". This will be copied by formula to the rest of the pages as required.

Type the instructor's name into cell "D6". This will be copied by formula to the rest of the pages as required.

Type the course identifier into cell "I6". This will be copied by formula to the rest of the pages as required.

The problem is identified for you in cell "B7".

In "DATE" cells enter the date in any of several formats and Excel will format it correctly.

If more than one page is preformatted into the problem, page breaks are preset and formulas are
set to copy the header into the remaining pages.

Place the proper account title in the cell where the word "ACCOUNT" appears on the template.

Place the amount in the cell where the word "AMOUNT" appears on the template. A formula may be placed in

Enter a number like 914 to signify units or gallons where the word "NUMBER" appears.

Write a formula into cells where the word "FORMULA" appears. In these cells, an amount calculated outside of

Place the explanation for the entry in the cell where the word "EXPLANATION" appears on the template.

Insert the account number where "ACCT #" appears on the template during posting.

Insert the journal reference where "JOURN #" appears on the template during posting.

Insert the title in the cell where "TITLE" appears on the template.

The print area is defined to fit onto 8 1/2" X 11" sheets in portrait or landscape mode as required.

The gray filled cells define the perimeter of the problem and the print area.

The problem is formatted for whole dollars with comma separations (no cents) except where required.

The display may have "Freeze Pane" invoked so column titles remain visible during data entry.

Negative values may be shown as (\$400) vice -\$400.

Enter a string like: (\$259,417 X 12 months) + (0.3651 X 5,434,631) where the word TEXT appears.

```
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