Question

8.

Pantanal, Inc., manufactures car seats in a local factory. For costing purposes, it uses a first-in, first-out (FIFO) process costing system. The factory has three departments: Molding, Assembling, and Finishing. Following is information on the beginning work-in-process inventory in the Assembling Department on August 1:

	Costs			Degree of Completion
Work-in-process beginning inventory (11,000 units)
Transferred-in from Molding	$	95,000			100	%
Direct materials costs		164,000			60
Conversion costs		63,000			40
Work-in-process balance (August 1)	$	322,000

During August, 102,000 units were transferred in from the Molding Department at a cost of $2,121,600 and started in Assembling. The Assembling Department incurred other costs of $972,645 in August as follows:

	August Costs
Direct materials costs	$	775,500
Conversion costs		197,145
Total August costs	$	972,645

At the end of August, 15,000 units remained in inventory that were 80 percent complete with respect to direct materials and 50 percent complete with respect to conversion.

Required:

Compute the cost of goods transferred out in August and the cost of work-in-process ending inventory. (Do not round intermediate calculations.)

Answer 1

Answer

• Cost of Goods transferred = $ 2,999,620

--Working

Cost Transferred out:	EUP	Cost per EUP	Total Cost
Cost of Beginning WIP			322,000.00
Cost to complete beginning WIP-
- Transferred in Cost	-	20.80	-
- Direct Materials	4,400.00	7.50	33,000.00
- Conversion	6,600.00	1.95	12,870.00
Total cost to complete beginning WIP			367,870.00
Cost of Units started & completed this period:	EUP	Cost per EUP	Total Cost
- Transferred in Cost	87,000.00	20.80	1,809,600.00
- Direct Materials	87,000.00	7.50	652,500.00
- Conversion	87,000.00	1.95	169,650.00
Total costs started & Completed this period			2,631,750.00
Total cost of work finished this period				2,999,620.00

• Cost of ending inventory = $ 416,625

--Working

Costs of Ending WIP:	EUP	Cost per EUP	Total Cost
- Transferred in Cost	15,000.00	20.80	312,000.00
- Direct Materials	12,000	7.50	90,000.00
- Conversion	7,500	1.95	14,625.00
Total cost of ending WIP				$             416,625.00

• Other related workings

EUP - FIFO Method	Units	% Transferred In	EUP Transferred In	% Material	EUP Materials	% Conversion	EUP - Conversion
Units of ENDING WIP	15,000	100.0%	15,000	80.0%	12,000	50.0%	7,500
Units STARTED & COMPLETED	87,000	100.0%	87,000	100%	87,000	100%	87,000
Units of beginning WIP	11,000	0.0%	-	40.00%	4,400	60.00%	6,600
Equivalent Units of Production			102,000		103,400		101,100
COST per EUP			Transferred In Cost		Material		Conversion
Cost incurred this period			$    2,121,600.00		$                  775,500.00		$    197,145.00
Total Costs		Costs	$    2,121,600.00	Costs	$                  775,500.00	Costs	$    197,145.00
Equivalent units of production		EUP	102,000	EUP	103,400	EUP	101,100
Cost per EUP			$           20.80000		$                        7.50000		$            1.9500