Question

Question 4 (14 Marks) Johnstone Brewers Inc. uses the FIFO method in its process costing system. The following data concern the operations of the company's first processing department for a recent month: Work in process, beginning Units in process Stage of completion with respect to materials Stage of completion with respect to conversion Costs in the beginning inventory Materials cost Conversion cost 300 60% 80% $594 $8.256 Units started into production during the month Units completed and transferred out 26,000 25,500 Costs added to production during the month: Materials cost Conversion cost $79,732 $887,62€ Work in process, ending Units in process Stage of completion with respect to materials Stage of completion with respect to conversion 80C 50% 40% Required: Using the FIFO method: a) Determine the equivalent units of production for materials and conversion costs. (4 Marks) b) Determine the cost per equivalent unit for materials and conversion costs. (4 Marks) c) Determine the cost of units transferred out of the department during the month. (4 marks) d) Determine the cost of ending work-in-process inventory in the department. (2 Marks)

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.

Answer 2 Part 1) Statement of Equivalent units Physical Units % completion Material % completion Conversion Cost Particular 5 Units completed and transferred 5 Beginning inventory 7 units started and completed 3 units in ending inventory Equivalent units 300 25200 800 26300 40 100 50 120 25200 400 25720 20 100 40 60 25200 320 25580 Material 25720 Conversion Cost 25580 2 Equivalent units 4 Part 2) Cost Per Equivalent Units 6 Particular Material 7 Cost incurred during the period 79732 8 No. of equivalent units 25720 9 Cost Per Equivalent Units 3.1 Conversion Cost 887626 25580 34.7 Material -1 Particular -2 Cost Per Equivalent Units Conversion Cost 34.7

8850 24 Part 3) Cost of units transferred to next department 26 Cost in beginning work in process (594+82556) 27 Material cost incurred to complete the beginning 28 Conversion cost incurred to complete the beginni 29 units started and completed (3.1+34.7)*25200) 30 Cost of units transferred to next department 372) 2082 952560 963864 32 Thus the cost of units transferred to next department = $ 963864 34 Part 4) Cost of ending work in process 37 Material (3.1*400) 38 Conversion Cost (34.7*320) 39 Total cost of ending work in process 40 41 Thus the cost of ending inventory = $ 12344 42 1,240 11,104 12,344