Question

[The following information applies to the questions displayed below.] The Matsui Lubricants plant uses the FIFO method to account for its work-in- process inventories. The accounting records show the following information for a particular day $ 980 287 Beginning WIP inventory Direct materials Conversion costs Current period costs Direct materials Conversion costs 11,285 7,287 Quantity information is obtained from the manufacturing records and includes the following Beginning inventory Current period units started Ending inventory 500 units (60% complete as to materials, 56% complete as to conversion) 4,100 units 1,000 units (40% complete as to materials, 15% complete as to conversion) Exercise 8-36 (Algo) Assign Costs to Goods Transferred Out and Ending Inventory: FIFO Method (LO 8-5) Compute the cost of goods transferred out and the ending inventory using the FIFO method. (Do not round intermediate calculations.) Cost of goods transferred out Cost of ending inventory

Answer 1

Solution

	Total
Cost of goods transferred out	$ 18,304
Ending Inventory	$ 1,535

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed		% completed this period
		Material	Conversion cost	Material	Conversion cost
Beginning WIP	500	60%	56%	40%	44%
Units introduced	4,100
Total units to be accounted for	4,600
Completed and Transferred unit	3,600	0%	0%	100%	100%
Ending WIP	1,000	0%	0%	40%	15%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material		Conversion cost
Units Transferred:		% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	500	40%	200	44%	220
From units started/Introduced	3,100	100%	3,100	100%	3,100
Total	3,600		3,300		3,320
	Total Units	Material		Conversion cost
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	1,000	40%	400	15%	150
Total EUP	4,600		3,700		3,470

.

STEP 3
Cost per Equivalent Units AND Cost to be accounted for
	Material		Conversion cost		TOTAL
Cost incurred in Current Period	$ 11,285		$ 7,287		$ 18,572
Total Equivalent Units	3,700		3,470
Cost per Equivalent Units	$ 3.05		$ 2.10		$ 5.15
Cost of Beginning WIP					$ 1,267
Total cost to be accounted for					$ 19,839

.

STEP 4
Cost report [Including Reconciliation]
	Cost of	Units Transferred		3,600.00	units
		Equivalent Units [Step 2]	Cost per Equivalent Units [Step 3]	Cost of Units Transferred	TOTAL
A	From Beginning WIP:
	Material	200	$ 3.05	$ 610
	Conversion cost	220	$ 2.10	$ 462	$ 1,072
B	From units started & completed
	Material	3,100	$ 3.05	$ 9,455
	Conversion cost	3,100	$ 2.10	$ 6,510	$ 15,965
C=A+B	Total				$ 17,037
D	Cost of Beginning WIP				$ 1,267
E=C+D	Total Cost of Units transferred				$ 18,304
	Cost of	Ending WIP		1,000.00	units
		Equivalent Units [Step 2]	Cost per Equivalent Units [Step 3]	Cost of Ending WIP	TOTAL
F	Material	400	$ 3.05	$ 1,220
G	Conversion cost	150	$ 2.10	$ 315
H = F + G	Total Cost of Ending WIP				$ 1,535
I = E + H	Total Cost accounted for				$ 19,839
J	Rounding Off Differences				$ 0
K = I + J	Total cost to be accounted for [equals to computed in STEP 3]				$ 19,839