Question

Jarvene Corporation uses the FIFO method in its process costing system. The following data are for the most recent month of operations in one of the company’s processing departments:

Units in beginning inventory	420
Units started into production	4,290
Units in ending inventory	320
Units transferred to the next department	4,390

	Materials		Conversion
Percentage completion of beginning inventory	80	%	20	%
Percentage completion of ending inventory	70	%	40	%

The cost of beginning inventory according to the company’s costing system was $7,823 of which $4,851 was for materials and the remainder was for conversion cost. The costs added during the month amounted to $178,986. The costs per equivalent unit for the month were:

	Materials	Conversion
Cost per equivalent unit	$18.00	$23.00

Required:

1. Compute the total cost per equivalent unit for the month.

2. Compute the equivalent units of material and conversion in the ending inventory.

3. Compute the equivalent units of material and conversion that were required to complete the beginning inventory.

4. Compute the number of units started and completed during the month.

5. Compute the cost of ending work in process inventory for materials, conversion, and in total for the month.

6. Compute the cost of the units transferred to the next department for materials, conversion, and in total for the month.

Answer 1

1) Total cost per equivalent unit = 18+23 = 41

2) Equivalent unit of ending inventory

	Material	Conversion
Equivalent unit in ending inventory	320*70% = 224	320*40% = 128

3) Cost of equivalent unit in beginning inventory completed

	Material	Conversion
Equivalent unit in beginning inventory	420*20% = 84	420*80% = 336

4) Cost of unit started and completed = 4390-420 = 3970

5) Cost of ending WIP

	Material	Conversion	Total
Cost of ending WIP	224*18 = 4032	128*23 = 2944	6976

6) Cost of units transferred out

	Material	Conversion	Total
Cost of unit transferred out	(4054*18+4851) = 77823	(4306*23+2972) = 102010	179833