Question

Daosta 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. 600 40% 20% $ $ Work in process, beginning: Units in process Percent complete with respect to materials Percent complete with respect to conversion Costs in the beginning inventory: Materials cost Conversion cost Units started into production during the month Units completed and transferred out Costs added to production during the month: Materials cost Conversion cost Work in process, ending: Units in process Percent complete with respect to materials Percent complete with respect to conversion 515 2,099 13,000 13,000 $ 22,855 $333, 454 600 50% 50% Required: Using the FIFO method: a. Determine the equivalent units of production for materials and conversion costs. b. Determine the cost per equivalent unit for materials and conversion costs. c. Determine the cost of ending work in process inventory. d. Determine the cost of units transferred out of the department during the month.

Answer 1

Solution

	Material	Conversion
Equivalent Units of Production	13,060	13,180

.

	Material	Conversion
Cost per equivalent Unit	$             1.75	$                25.30

.

Cost of Ending Inventory

$ 8,115

.

Cost of Units Completed and transferred

$ 350,808

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed		% completed this period
		Material	Conversion cost	Material	Conversion cost
Beginning WIP	600	40%	20%	60%	80%
Units introduced	13,000
Total units to be accounted for	13,600
Completed and Transferred unit	13,000	0%	0%	100%	100%
Ending WIP	600	0%	0%	50%	50%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material		Conversion cost
Units Transferred:		% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	600	60%	360	80%	480
From units started/Introduced	12,400	100%	12,400	100%	12,400
Total	13,000		12,760		12,880
	Total Units	Material		Conversion cost
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	600	50%	300	50%	300
Total EUP	13,600		13,060		13,180

.

STEP 3
Cost per Equivalent Units AND Cost to be accounted for
	Material		Conversion cost		TOTAL
Cost incurred in Current Period	$ 22,855		$ 333,454		$ 356,309
Total Equivalent Units	13,060		13,180
Cost per Equivalent Units	$ 1.75		$ 25.30		$ 27.05
Cost of Beginning WIP					$ 2,614
Total cost to be accounted for					$ 358,923

.

STEP 4
Cost report [Including Reconciliation]
	Cost of	Units Transferred		13,000.00	units
		Equivalent Units [Step 2]	Cost per Equivalent Units [Step 3]	Cost of Units Transferred	TOTAL
A	From Beginning WIP:
	Material	360	$ 1.75	$ 630
	Conversion cost	480	$ 25.30	$ 12,144	$ 12,774
B	From units started & completed
	Material	12,400	$ 1.75	$ 21,700
	Conversion cost	12,400	$ 25.30	$ 313,720	$ 335,420
C=A+B	Total				$ 348,194
D	Cost of Beginning WIP				$ 2,614
E=C+D	Total Cost of Units transferred				$ 350,808
	Cost of	Ending WIP		600.00	units
		Equivalent Units [Step 2]	Cost per Equivalent Units [Step 3]	Cost of Ending WIP	TOTAL
F	Material	300	$ 1.75	$ 525
G	Conversion cost	300	$ 25.30	$ 7,590
H = F + G	Total Cost of Ending WIP				$ 8,115
I = E + H	Total Cost accounted for				$ 358,923
J	Rounding Off Differences				$ 0
K = I + J	Total cost to be accounted for [equals to computed in STEP 3]				$ 358,923