Question

Required Information Exercise 8-35 & 8-36 (Algo) (LO 8-5) (The following information applies to the questions displayed below) The Matsul Lubricants plant uses the FIFO method to account for its work-in-process inventories. The accounting re show the following Information for a particular day. 986 317 Beginning WIP inventory Direct materials Conversion costs Current period costs Direct materials Conversion costs 12,415 8.441 Quantity Information is obtained from the manufacturing records and includes the following Beginning Inventory Current period units started Ending inventory Gee units (Ges complete as to materials, 55% complete as to conversion) 4,300 units 1.200 units (40% complete as to materials, 25% complete as to conversion) Exercise 8-36 (Algo) Assign Costs to Goods Transferred Out and Ending Inventory: FIFO Methe 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

FIFO method :-
a	Equivalent units of production for direct materials and conversion
	Equivalent Units of Production for Direct Materials and Conversion Costs
		Whole Units	% to complete	Equivalent Units Direct Materials	% to complete	Equivalent Units Conversion
	Work in process, Beginning	600
	Units started into production	4,300
	Total units	4,900
	Units accounted for:
	From beginning Work in process	600	40%	240	45%	270
	Started and completed (3700-600)	3,100	100%	3,100	100%	3,100
	Units completed and Transferred out (4900-1200)	3,700
	Work in process, Ending	1,200	40%	480	25%	300
	Equivalent Units of Production	4,900		3,820		3,670
b	Costs per equivalent unit for direct materials and conversion
	Equivalent Units of Production for Direct Materials and Conversion Costs
	COSTS	Costs
		Direct Materials	Conversion	Total
	Unit Costs
	Total Costs added during month	$         12,415	$                       8,441	$     20,856
		÷	÷
	Equivalent units	3820	3670
	Cost per equivalent unit	$3.25	$2.30	$5.55
	Costs to be accounted for
	Cost of beginning Work in process	$              986	$                          317	$      1,303
	Total Costs added during period	$         12,415	$                       8,441	$     20,856
	Total Costs to account for			$     22,159
c	The assignment of costs to units transferred out and to work in process at the end of the accounting period. :-
		Equivalent units	Cost per equivalent unit		Total
	Cost of Beginning Work in proces inventory				$        1,303
	Cost added into Beginning Work in proces inventory
	Materials	240	$3.25	$780
	Conversion Costs	270	$2.30	$621	$        1,401
	Cost of Complete beginning WIP (a)				$        2,704
	Cost of units started and completed during the period Transferred out (b)	3,100	$5.55		$      17,205
	Cost of units Transferred out (a+b)				$      19,909
	Cost of Ending Work in proces inventory
	Materials	480	$3.25	$         1,560
	Conversion Costs	300	$2.30	$            690	$        2,250
	Total costs accounted for				$      22,159
	Cost of goods transferred out	$            19,909
	Cost of ending inventory	$               2,250

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