Question

USING FIFO

Check my Alvis Construction Supply Company has a department that manufactures wood trusses (wood frames used in the construction industry). The following information is for the production of these trusses for the month of February Work-in-process inventory, February 1 Direct materials: ieex complete Conversion: 3e% complete Units started during February Units completed during February and transferred out Work-in-process inventory, February 29 Direct materials: les complete Conversion: 38% complete Costs incurred during February Direct materials Conversion 4,600 trusses $11,089 $15,858 18,600 trusses 17,600 trusses $59,640 $92,692 Required Using the FIFO method, calculate the following 1-a. Costs per equivalent unit. (Round your answers to 4 decimal places.) 1-5. Cost of goods completed and transferred out. (Do no round your intermediate calculations. Round your final answer to the nearest whole dollar.) 1-c. Costs remaining in the Work-in-Process Inventory account. (Do no round your intermediate calculations. Round your final answer to the nearest whole dollar.) < Prev 2 of 3 !!! Next >

Answer 1

Solution 1a to 1c:

Equivalent units of production (EUP) - FIFO method
	Units	%Material	EUP-Material	% Conversion	EUP- Conversion
Beginning units completed this period (A)	4600	0%	0	70%	3220
Units Started and Completed (450000-100000) (B)	13000	100%	13000	100%	13000
units of Ending work in process (D)	5600	100%	5600	30%	1680
Equivalent units of production (C+D)			18600		17900
Cost per EUP			Material		Conversion
Costs incurred this period (Total Costs)		Costs	$59,640	Costs	$92,692
/Equivalent units of Production		EUP	18600	EUP	17900
Cost per Equivalent unit of Production			$3.2065		$5.1783
Cost Assignment and Reconciliation
Beginning Inventory Cost:				$26,938
Cost to Complete Beginning Inventory	EUP	Cost per EUP	Total Cost
Direct materials	0	$3.2065	$0
Conversion	3220	$5.1783	$16,674
Total Cost to complete Beginning Inventory				$16,674
Total Costs of units in Beginning Inventory				$43,612
Cost of units started and completed	EUP	Cost per EUP	Total Cost
Direct Material	13000	$3.2065	$41,684
Conversion	13000	$5.1783	$67,318
Total Cost of units started and completed				$109,002
Total cost of units transferred out				$152,614
Cost of ending work in process	EUP	Cost per EUP	Total Cost
Direct Material	5600	$3.2065	$17,956
Conversion	1680	$5.1783	$8,700
Total Ending work in process				$26,656
Total Costs accounted for				$179,270

Solution 2:

Equivalent units of production (EUP) - FIFO method

	Units	%Material	EUP-Material	% Conversion	EUP- Conversion
Beginning units completed this period (A)	4600	0%	0	70%	3220
Units Started and Completed (450000-100000) (B)	13000	100%	13000	100%	13000
units of Ending work in process (D)	5600	100%	5600	50%	2800
Equivalent units of production (C+D)			18400		19020
Cost per EUP			Material		Conversion
Costs incurred this period (Total Costs)		Costs	$59,640	Costs	$92,692
/Equivalent units of Production		EUP	18600	EUP	19020
Cost per Equivalent Unit of Production			$3.2065		$4.8734

New per unit equivalent cost = $3.2065 + $4.8734= $8.0799

Current per unit equivalent cost = $3.2065 + $5.1783 = $8.3848

Change in cost per equivalent unit = $8.3848 - $8.0799 = $0.3049

The weighted average cost per equivalent unit decreases by $0.3049