The document discusses process costing and how costs flow through multiple departments in a manufacturing process. It provides examples of calculating equivalent units of production and allocating material and conversion costs per equivalent unit. Specifically, it explains how to determine beginning, started/completed, and ending units based on percentage of completion. It then shows how to calculate a cost per equivalent unit for both materials and conversion costs, and allocate those costs to the different unit categories. This allows tracking the total costs incurred and transferred through each stage of the manufacturing process.

1. Prof post:
Leadership has been described as the “process of social
influence in which individuals are enlisted in providing aid and
gaining support of others in the accomplishment of a common
task.”
Do you agree or disagree with the above definition of
leadership? Compare and contrast the introduction to this
module with your own theory of leadership. Respond to two of
your fellow learners with a positive yet critical analysis of their
discussion.
My post discussion response with 2 references required.
Post 1 from Sonia:
I agree with this definition of leadership. My idea of leadership
is pretty much the same; the innate ability to redirect towards a
greater common goal. Our text uses the ability to redirect in the
discussion of power. “The ability to influence the behaviors of
others and resist unwanted influence in return”. (Colquitt 2013,
p419). Power plays enormous part in the role of leadership. In
the past, issues I have had at work have stemmed largely from a
leader not being able to navigate through conflict. Ultimately it
was because they lacked influence over the staff and results
were compliance-“reflects a shift in behavior but not in their
attitude” or resistance. –“When the target refuses to perform the
influence request and puts forth an effort to avoid having to do
it.” (Colquitt 2013, p.426)
My response to post 1 (no ref to post):
Post 2 from maria:
I agree with the above description, but I think that definition is
missing more information. In my opinion a leadership is also
the one that has the power, and ability to lead a group of people
to do a task or to accomplish the task. A good leadership can
motivate and guide individuals to follow his/her steps or to do
good in life.
Leadership appears to be, like power, an “essentially contested

2. concept “ (Gallie, 1955 cited in Grint, 2004 pl
Taylor, A. "Chrysler's Speed Merchant." Fortune, September 6,
2010, p.82
My response to post 2 (no ref to my post) :
B) PROF QUESTION
From the movie Hoosiers, select two examples of behaviors that
indicated that Coach Dale used the Hersey and Blanchard Life
Cycle Theory of Leadership? Similarly discuss how he used
transformational leadership behaviors. Respond to two of your
fellow learners with a positive yet critical analysis of their
discussion.
My post discussion response with 2 references required:
POST 1 from Sonia:
The Life Cycle Theory is used in this movie. When Coach Dale
comes to team and communicate the team his rules and how
they should be practicing, and later as they starting playing and
they were losing Coach Dale used two way communications by
providing emotional support and encouragement. This was R1 to
R2. As the time passed the players starting believing in their
abilities, hence Coach Dale provided less task behaviors, at the
end the players were playing as a team and they believe in
themselves.
References:
Reardon, N. “Making Leadership Personal.” T+D, March 2011,
pp 44-4
Kraz, G. “A Higher Standard fro Managers.” Workforce, June
11, 2007, pp 21-26
My response to post 1 (no ref to post)
Post 2 from Maria:
The Hersey and Blanchard Life Cycle Theory of Leadership is
highlighted in the movie Hoosier. The movie start with a very

3. dysfunctional team, all they can do is shoot. Coach Dale comes
in and begins to work on fundamentals. Two of the team quit.
You see coach Dale "telling," not just the team, but the town as
well. At the end of the first game, the coach says, take the
weekend and decide, do you want to be on the team with me as
coach? This was the transition from R1 Telling, to R2 Selling.
Later the team transitioned from R3 Participating to R4
Delegating. In the movie the coach got himself thrown out of
the game and forced Shooter to “bring them home.” This was an
instrumental turning point for the team and Shooter.
My response to post 2 (no ref to post)
Sheet1PROCESS COSTING WORKSHEETLAYERSACTUAL
UNITS%EUPMATERIALSCONVERSION COSTSTOTAL
COSTBEGINNING INVENTORYSTARTED &
COMPLETEDENDING INVENTORYDirect materialsDirect
laborFactory overheadPROCESS COSTING
WORKSHEETLAYERSACTUAL
UNITS%EUPMATERIALSCONVERSION COSTSTOTAL
COSTBEGINNING INVENTORYSTARTED &
COMPLETEDENDING INVENTORY
Sheet2
Sheet3

4. ACG 2071
Process Cost Systems
Created by: M. Mari
Fall 2009-1
Page 1 of 13
Process Manufacturing
f products in a continuous flow
of steps
department, workstation, or work center.
each receives the output from the prior department as
a partially processed product.
applies direct labor, overhead, and additional direct
materials to move the product toward completion.
Process Cost System

5. to specific processes.
on units of production
re accumulated and transferred
by department
divided by the number of units passing through that
process to determine the cost per equivalent units
for that process
ACG 2071
Process Cost Systems
Created by: M. Mari
Fall 2009-1
Page 2 of 13
To understand how costs are allocated, first we must decide
how the costs are accumulated. One method is First in, First
out method.
Beverage Production

6. Costs flow from the original materials through departments
Until they arrive at finished goods.
The First-In, First –Out Method
Assumes that the product moves in order throughout
the production process.
STEPS:
1. Determine the units to be assigned costs
Three categories of units to be assigned costs
for an accounting period
i. Units in beginning work in process
ii. Units started and completed during the
period
iii. Units in ending work in process
inventory

7. 2. Calculate equivalent units of production
Materials Mixing
Department
Packing
Department
ACG 2071
Process Cost Systems
Created by: M. Mari
Fall 2009-1
Page 3 of 13
a. Process manufactures often have some
partially processed materials remaining in the
production at the end of a period.
b. Equivalent units of production – number of
units that could have been completed within
a given accounting period
Example 1: A company processes their production in two
departments. The beginning inventory was 500 units 70%

8. completed, 1,100 units were transferred out to the next
department and it had an ending inventory of 400 units 25%
completed. Compute equivalent units for materials and
conversion costs.
Actual units Percentage EUP
Beg inventory 500 units 30%
(% of work to be
done this month)
150 units
(150 X 30%)
Started and
Competed
600 units*
100%
(all work done this
month)
600 units
(600 x 100%)
Ending
inventory
400 units 25% (work done
this month)
100 units
(400 X 25%)

9. TOTALS 1,500 850 units**
*Started and completed units computed as:
Transferred out 1,100
Beginning inventory - 500 must be completed first
Started and completed 600
** 850 units are the equivalent units of production for the
period.
ACG 2071
Process Cost Systems
Created by: M. Mari
Fall 2009-1
Page 4 of 13
Example 2: A company processes their production in two
departments. The beginning inventory was 1,000 units 40%
completed, transferred out to the next department 2,500
units and had an ending inventory of 900 units 60%
completed. Compute equivalent units for materials and
conversion costs.
Actual units Percentage EUP

10. Beg inventory 1,000 60% 600
Started and
Competed
1,500 100% 1,500
Ending
inventory
900 60% 540
TOTALS 3,400 2640
Started and completed units computed as:
Transferred out 2,500
Beginning inventory -1,000 must be completed first
Started and completed 1,500
Example 3: A company processes their production in two
departments. The beginning inventory was 4,000 units 50%
completed, transferred into the department 5,000 units and
had an ending inventory of 2,000 units 40% completed.
Compute equivalent units for materials and conversion
costs.
Actual units Percentage EUP
Beg inventory 4,000 50% 2,000
Started and

11. Competed
3,000* 100% 3,000
Ending
inventory
2,000 40% 800
TOTALS 9,000 5,800
ACG 2071
Process Cost Systems
Created by: M. Mari
Fall 2009-1
Page 5 of 13
*Started and completed units
given to us was Units transferred into the
department and not units transferred out.
ansferred into the department were 5,000
of which 2,000 remain at the end of the month in
inventory.

12. been completed and transferred out.
Transferred in 5,000
Ending inventory 2,000
Started and completed 3,000
The next step is to allocate costs:
3. Determine the cost per equivalent unit
a. Material cost
b. Conversion costs = direct labor + factory
overhead
We begin with the EUP already established in the first half of
the chart. Material costs and conversion costs are applied to
these units.
Materials are applied to ACTUAL UNITS
Conversion costs are applied to EQUIVALENT UNITS

13. ACG 2071
Process Cost Systems
Created by: M. Mari
Fall 2009-1
Page 6 of 13
Example 4: Using the information in Example 1 calculate
the costs for the period. Materials transferred in $50,000.
Direct labor $6,690 and factory overhead $3,000. Cost of
beginning work in process $28,150.
Actual
Units
% EUP Materials Conversion
Costs
Total
Costs
Beg
inventory
500 30% 150 $28,150* $1,710 $29,86
0
Started &
Completed
600 100% 600

14. $30,000**
$6,840 $36,84
0
Ending
Inventory
400 25% 100
$20,000**
$1,140 $21,14
0
TOTALS 850 $6,690
Materials:
$50,000 in materials were transferred into the process.
The material was applied to units new to the process. These
are the units: started and completed and ending inventory.
Actual units are units that are placed into production at the
beginning of the period.
Actual units = Started & Completed + Ending Inventory
= 600 + 400
= 1,000
To get the per unit costs:
Total materials costs .
Units started & completed + Units in ending inventory

15. ACG 2071
Process Cost Systems
Created by: M. Mari
Fall 2009-1
Page 7 of 13
$50,000
1,000
=$50 per actual unit of production
since it is assumed at all material is added at the
beginning when the units are placed in production
not during the production process.
** Material costs applied to started and completed using
actual units
$50 X 600 units = $30,000
***Material costs applied to ending inventory using actual
units
$50 X 400 = $20,000
*$28,150 is the prior month’s ending inventory balance. It
tells us how much has been spent on the units in beginning
inventory before this period begun.

16. Conversion Costs:
production
Conversion Costs
Direct labor $6,690
Factory overhead 3,000
Total conversion costs $9,690
Total equivalent units of production
ACG 2071
Process Cost Systems
Created by: M. Mari
Fall 2009-1
Page 8 of 13
EUP
Beginning inventory 150
Started and completed 600
Ending inventory 100
Total EUP 850

17. Conversion cost per EUP
Conversion cost = $9,690
EUP 850
$11.40 per EUP
Beginning inventory
150 EUP X $11.40 = $1,710
Started and completed
600 EUP X $11.40 = $6,840
Ending inventory
100 EUP X $11.40 = $1,140
Beginning inventory $1,710
Started and completed 6,840
Ending inventory 1,140
Total conversion costs $6,690
ACG 2071
Process Cost Systems

18. Created by: M. Mari
Fall 2009-1
Page 9 of 13
Example 5: Using the information in Example 2 calculate
the costs for the period. Materials transferred in $30,600.
Direct labor $19,800 and factory overhead $9,240. Cost of
beginning work in process $35,000.
Actual
Units
% EUP Materials Conversion
Costs
Total
Costs
Beg inv 1000 60 600 $35,000 $8500 $43,500
Started &
Completed
1500 100 2500 $19,125 $12,750 $31,875
End Inv 900 60 540 $11,475 $7,650 $19,125
TOTALS 3640

19. Materials:
$30,600 in materials were transferred into the process.
The material was applied to units new to the process. These
are the units: started and completed and ending inventory.
To get the per unit costs:
Total materials costs .
Units started & completed + Units in ending inventory
$30,600
1,500 + 900
$12.75 per actual unit of production
ACG 2071
Process Cost Systems
Created by: M. Mari
Fall 2009-1
Page 10 of 13
eginning inventory
** Material costs applied to started and completed using
actual units
$12.75 X 1,500 units = $19,125

20. ***Material costs applied to ending inventory using actual
units
$12.75 X 900 = $11,475
Conversion Costs:
Are the total of direct labor plus factory overhead
Conversion costs are applied to Equivalent units of
production
Direct labor $19,800
Factory overhead $9,240
Total conversion costs $29,040
Total equivalent units of production
Beginning inventory 1,000 EUP
Started and completed 1,500
Ending inventory 900
Total EUP 3,400
Conversion cost per EUP
Conversion cost = $29,040
EUP 3,400
$8.50 per EUP
ACG 2071

21. Process Cost Systems
Created by: M. Mari
Fall 2009-1
Page 11 of 13
Beginning inventory
1,000 EUP X $8.50 = $8,500
Started and completed
1,500 EUP X $8.5 = $12,750
Ending inventory
900 EUP X $8.50 = $7,650
Questions:
o It is the sum of total cost of beginning inventory
plus total cost of units started and completed.
o $43,500 + $31,875 = $75,375
o This is the amount transferred to finished goods
inventory
period?
o 900 actual units
inventory?
o 900 actual units

22. o Last month’s ending inventory is next month’s
beginning inventory
o The cost of this month’s ending inventory
o $19,125
o $8.50 per eup
ount of work done on this month’s
beginning inventory?
o 60% is done this month
beginning inventory?
o 40%
o Ending inventory this month is 60% complete so
next month it needs 40% to be completed.
ACG 2071
Process Cost Systems
Created by: M. Mari
Fall 2009-1
Page 12 of 13

23. Cost of Production Report
Normally prepared for each processing department at
periodic intervals
Guy Steel
Cost of Production Report – Dept 1
July 31, 2003
Equivalent Units
Units Whole
Units
Direct
materials
Conversion
Units charged to production:
Inventory in process July1 500
Received from materials 1000
Total units accounted for by
the dept
1500
Units to be assigned cost
Inventory July 1 500 0 150

24. Started and completed 600 600 600
Total transferred out 1100 600 750
Inventory in process July 31
(25%)
400 400 100
Total units to be assigned costs 1500 1000 850
Costs Direct
Materials
Conversion
Costs
Total Costs
Unit costs
Total costs for July $50,000 $9,690
Total equivalent units 1,000 850
Cost per equivalent unit $50.00 $11.40
Costs charged to production
Inventory July 1 $28,150
Costs incurred in July $59,690

25. Total cost of inventory in
process
$87,840
ACG 2071
Process Cost Systems
Created by: M. Mari
Fall 2009-1
Page 13 of 13
Costs allocated to completed
and partially completed units
Inventory in process July 1 $28,150
To complete inventory in
process
0 1,710 $1,710
Started and completed in
July
30,000 6,840 $36,840
Transferred out $66,700

26. Inventory in process July 31 20,000 1,140 $21,140
Total costs assigned $87,840
Journal Entries
Same as in job order but instead of accounting for
jobs, we account by department.
ACG 2071 Managerial Accounting
Process Costing Systems
Minicase
PROCESS COSTING PROBLEM
Spectre Chemicals produces Zaloff in a two department process.
Information on the two
departments for March and April, 2011 are as follows:
March 2011:
Department 1: The company had beginning inventory of 6,000
units, 40% completed with a
cost of $45,000. During the month, the department transferred
in 22,000 units of the direct
materials with a cost of $10 per unit. Ending inventory was

27. 7,000 units, 30% completed.
Direct labor is $310,500 and factory overhead is $103,500.
Department 2: The company had beginning inventory of 5,000
units, 70% completed with a
cost of $80,000. During the month, direct labor was $175,000
and factory overhead was
$87,500. Ending inventory was 10,000 units, 50% completed.
April 2011:
Department 1: During the month, the department transferred
in 20,000 units of the direct
materials with a cost of $11 per unit. Direct labor is $209,000
and factory overhead is
$104,500. Ending inventory is 10,000 units 60% completed.
Department 2: The company had beginning inventory of 5,000
units, 70% completed with a
cost of $80,000. During the month, direct labor is $175,000 and
factory overhead is
$87,500.
Required:
and Conversion costs for each
department for March and April, 2011.
– one for each department and
each month