Question

Tamar Co. manufactures a single product in two departments. All direct materials are added at the beginning of the Forming process. Conversion costs are added evenly throughout the process. During May, the Forming department started 21,600 units, and transferred 22,200 units of product to the Assembly department. Its 3,000 units of beginning work in process consisted of $19,800 of direct materials and $221,940 of conversion costs. It has 2,400 units (100 %complete with respect to direct materials and 80 %complete with respect to conversion) in process at month-end. During the month, $496,800 of direct materials costs and $2,165,940 of conversion costs were charged to the Forming department. The following additional information is available for the Forming department.

- Beginning work in process consisted of 3,000 units that were 100 %complete with respect to direct materials and 40 %complete with respect to conversion.

- Of the 22,200 units transferred out, 3,000 were from beginning work in process. The remaining 19,200 were units started and completed during May.

Assume that Tamar uses the FIFO method to account for its process costing system.

1. Prepare the Forming department's process cost summary for May using the FIFO method.

Answer 1

• Requirement: FIFO Method

Costs Charged to Production:
Cost of beginning WIP	$                     241,740.00
Costs incurred this period	$                 2,662,740.00
Total Cost to account for	$                 2,904,480.00
Total costs accounted for	$                 2,904,480.00
Difference due to rounding cost/unit	$                                      -
Units Reconciliation
Units to account for:
Beginning WIP	3,000
Units started this period	21,600
Total Units to account for	24,600
Total Units accounted for:
Completed & Transferred out	22,200
Ending WIP	2,400
Total Units accounted for	24,600

EUP - FIFO Method	Units	% Material	EUP Materials	% Conversion	EUP - Conversion
Units of ENDING WIP	2,400	100.0%	2,400	80.0%	1,920
Units STARTED & COMPLETED	19,200	100%	19,200	100%	19,200
Units of beginning WIP	3,000	0.00%	-	60%	1,800
Equivalent Units of Production			21,600		22,920
COST per EUP			Material		Conversion
Cost incurred this period			$       496,800.00		$              2,165,940.00
Total Costs		Costs	$       496,800.00	Costs	$              2,165,940.00
Equivalent units of production		EUP	21,600	EUP	22,920
Cost per EUP			$           23.00000		$                        94.5000

COST ASSIGNMENT & RECONCILIATION
Cost Transferred out:	EUP	Cost per EUP	Total Cost
Cost of Beginning WIP			241,740.00
Cost to complete beginning WIP-
- Direct Materials	-	23.00	-
- Conversion	1,800.00	94.50	170,100.00
Total cost to complete beginning WIP			411,840.00
Cost of Units started & completed this period:	EUP	Cost per EUP	Total Cost
- Direct Materials	19,200.00	23.00	441,600.00
- Conversion	19,200.00	94.50	1,814,400.00
Total costs started & Completed this period			2,256,000.00
Total cost of work finished this period				2,667,840.00
Costs of Ending WIP:	EUP	Cost per EUP	Total Cost
- Direct Materials	2,400	$                            23.00	$          55,200.00
- Conversion	1,920	$                            94.50	$       181,440.00
Total cost of ending WIP				$             236,640.00
Total costs accounted for				$         2,904,480.00