Question

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 (8,000 units)
Transferred-in from Molding	$	99,000			100	%
Direct materials costs		171,200			60
Conversion costs		63,000			30
Work-in-process balance (August 1)	$	333,200

During August, 100,000 units were transferred in from the Molding Department at a cost of $2,010,000 and started in Assembling. The Assembling Department incurred other costs of $958,320 in August as follows:

	August Costs
Direct materials costs	$	833,320
Conversion costs		125,000
Total August costs	$	958,320

At the end of August, 14,000 units remained in inventory that were 80 percent complete with respect to direct materials and 60 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

Cost of Goods Transferred Out
Existing cost of 8000 units =		$     333,200.00	($ 99000 + $ 171200 + $ 63000)
Cost of Completing incomplete units:
Material Cost		$       26,560.00	(3200 x $ 8.30)
Conversion cost		$         7,000.00	(5600 x $ 1.25)
Cost of 86000 units		$ 2,549,900.00	(86000 x $ 29.65)
	Total	$ 2,916,660.00

Cost of Ending WIP
	Units	Cost/eq. units	Costs
Transferred In	14000	$               20.10	$ 281,400.00
Materials	11200	$                 8.30	$    92,960.00
Conversion	8400	$                 1.25	$    10,500.00
		Total	$ 384,860.00

Workings:

Statement of equivalent production					Degree of completion
					Transferred In			Materials			Conversion
Particulars	Units	Particulars	Units		%	Units		%	Units		%	Units
Opening WIP	8000	Transfer to next process:
Cars Commenced	100000	From O/p WIP	8000		-	-		40%	3200		70%	5600
		From Cars Commenced	86000		100%	86000		100%	86000		100%	86000
		Closing WIP	14000		100%	14000		80%	11200		60%	8400
	108000		108000			100000			100400			100000

Statement of cost per equivalent production
Element of costs	Units	Costs	Cost/eq. units
Transferred In	100000	$ 2,010,000.00	$                20.10
Materials	100400	$      833,320.00	$                  8.30
Conversion	100000	$      125,000.00	$                  1.25
			$                29.65

Is this okay?