Question

Reutter, Inc. makes a single product and uses the FIFO method of process costing. The company’s product goes through two processing departments – Etching and Wiring – which completes the process. This problem focuses on the Writing department which received the ‘etched’ products and then completes them by adding appropriate writing. In Wiring, the direct materials are placed into production when the process is 35% complete. Conversion costs are incurred evenly throughout the process. The relevant information for April is below:

Beginning work in process inventory	10,000 items, 30% complete as to conversion
Units started in April	170,000 units
Ending work in process inventory	20,000 items, 40% complete as to conversion
	Transferred-In     Materials          Conversion
Cost of beginning work in process	$    7,000                 $ 0                    $   4,900
Current costs in April	$187,000                 $153,000           $ 244,200

REQUIRED:

Complete and submit the following table including the T-Accounts. You can create your own ‘new’ file or use this WORD document. Rather than ‘typing in the numbers’, you may want to write them in and send a scanned pdf file. The Drop Box does not accept JPEG or pictures.

Reutter, Inc.

Flow of production	Physical Units		Transferred-In	Direct Materials	Conversion
WIP, beginning
Transferred in
To account for
Units completed & Transf Beg WIP Started & Completed
WIP, ending
Accounted for
Costs		Totals	Transferred-In	Direct Materials	Conversion
WIP, beginning
Costs added during period
Total costs to account for
Divided by equivalent units
Assignment of costs
Completed units (completed and transferred) Beg WIP Costs Finish up Beg WIP units Started & Completed
WIP, ending
Costs accounted for

Answer 1

Solution:

Reutter Inc.
Wiring Department
Computation of Equivalent unit (FIFO)
Particulars	Physical units	Transferred in cost	Material	Conversion
Units to be accounted for:
Beginning WIP Inventory	10000
Units started this period	170000
Total unit to be accounted for	180000
Units Accounted for:
Units completed and transferred out
From beginning inventory Prior department - 0% Material - 100% Conversion- 70%	10000	0	10000	7000
Started and completed currently	150000	150000	150000	150000
Units in ending WIP Prior department - 100% Material - 100% Conversion - 40%	20000	20000	20000	8000
Total units accounted for	180000	170000	180000	165000

Reutter Inc.
Wiring Department
Computation of Cost per Equivalent unit
Particulars	Total cost	Transferred in cost	Material	Conversion
Current period cost	$584,200.00	$187,000.00	$153,000.00	$244,200.00
Equivalent units		170000	180000	165000
Cost per equivalent unit		$1.10	$0.85	$1.48

Reutter Inc.
Wiring Department
Producton cost report - FIFO
Particulars	Total cost	Transferred in cost	Material	Conversion
Cost Accounted for :
Cost assigned to unit transferred out:
Cost from beginning WIP Inventory	$11,900.00	$7,000.00	$0.00	$4,900.00
Current cost added to complete beginning WIP:
Prior department cost	$0.00	$0.00
Material (10000*$0.85)	$8,500.00		$8,500.00
Conversion (7000*$1.48)	$10,360.00			$10,360.00
Total Cost from beginning inventory	$30,760.00	$7,000.00	$8,500.00	$15,260.00
Current cost of unit started and completed:
Prior department cost (150000*$1.10)	$165,000.00	$165,000.00
Material (150000*$0.85)	$127,500.00		$127,500.00
Conversion (150000*$1.48)	$222,000.00			$222,000.00
Total cost of unit started and completed	$514,500.00	$165,000.00	$127,500.00	$222,000.00
Total cost of unit transferred out	$545,260.00	$172,000.00	$136,000.00	$237,260.00
Cost assigned to ending WIP:
Prior department cost (20000*$1.10)	$22,000.00	$22,000.00
Material (20000*$0.85)	$17,000.00		$17,000.00
Conversion (8000*$1.48)	$11,840.00			$11,840.00
Total ending WIP inventory	$50,840.00	$22,000.00	$17,000.00	$11,840.00
Total cost accounted for	$596,100.00	$194,000.00	$153,000.00	$249,100.00