Question

Jarvene Corporation uses the FIFO method in its process costing system. The following data are for the most recent month of operations in one of the company's processing departments: Units in beginning inventory Units started into production Units in ending inventory Units transferred to the next departnent 410 4,280 320 4,370 Percentage completion of beginning inventory Percentage completion of ending inventory Materials 70% BOX Conversion 30% 49% The cost of beginning inventory according to the company's costing system was $7,821 of which $4,881 was for materials and the remainder was for conversion cost. The costs added during the month amounted to $178,727. The costs per equivalent unit for the month were: Cost per equivalent unit Materials Conversion $18.00 $23.00 Required: 1. Compute the total cost per equivalent unit for the month 2. Compute the equivalent units of material and conversion in the ending inventory. 3. Compute the equivalent units of material and conversion that were required to complete the beginning inventory. 4. Compute the number of units started and completed during the month. 5. Compute the cost of ending work in process inventory for materials, conversion and in total for the month. 6. Compute the cost of the units transferred to the next department for materials, conversion, and in total for the month.

Answer 1

1. Total cost per equivalent unit=   $41

Computation:

Total cost per equivalent unit= Cost per equivalent unit of materials+ Cost per equivalent unit of conversion

=$18+$23

=$41

2.

	Materials	Conversion
Equivalent units	256	128

Equivalent units of material: Units in ending inventory*percentage completion of ending inventory of materials

=320*80%

=256

Equivalent units of conversion: Units in ending inventory*percentage completion of ending inventory of conversion

=320*40%

=128

3.

	Materials	Conversion
Equivalent units	123	287

Equivalent units of material: Units in beginning invenotry* (100-percentage completed) for materials

=410*(100-70%)

=410*30%

=123

Equivalent units of conversion: Units in beginning invenotry* (100-percentage completed) for conversion

=410*(100-30%)

=410*70%

=287

4. No. of units started and completed during the month=3,960 units

Computation

No. of units started and completed during the month= Units transferred to the next department- Units in the beginning inventory

=4370-410

=3,960 units

5.

	Materials	Conversion	Total
Cost of ending work in process inventory	$4608	$2944	$7552

Cost of ending work in process inventory for materials= equivalent units of ending inventory*cost per equivalent units

=256*18

=$4,608

Cost of ending work in process inventory for conversion= equivalent units of ending inventory*cost per equivalent units

=128*23

=$2,944

6.

	Materials	Conversion	Total
Total cost of units transferred out	$78,375	$100,621	178,996

Total cost of units transferred out for materials=( units transferred to the next department- units in beginning inventory+equivalent units of beginning inventory)*Cost per equivalent unit of material+cost of beginning inventory according to company's costing system

=(4370-410+123)*$18+$4,881

=4083*$18+$4,881

=73,494+4,881

=$78,375

Total cost of units transferred out for conversion=( units transferred to the next department- units in beginning inventory+equivalent units of beginning inventory)*Cost per equivalent unit of conversion+cost of beginning inventory according to company's costing system

=(4,370-410+287)*$23+$2940

(note : cost of beginning inventory according to company's costing system= Total cost- cost for materials)

Total cost of units transferred out for conversion= 4247*$23+$2940

=$97,681+$2940

=$100621