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 department 440 4,290 340 4,390 Percentage completion of beginning inventory Percentage completion of ending inventory Materials Conversion 705 301 808 408 The cost of beginning inventory according to the company's costing system was $7,803 of which $4,847 was for materials and the remainder was for conversion cost. The costs added during the month amounted to $183,828. The costs per equivalent unit for the month were: Materials Conversion Cost per equivalent unit $24.00 $18.00 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

Solution: 1. Total cost perequivalent unit Particulars Direct materials Conversion cost Total cost per equivalent unit Amount in $ $ 18.00 $24.00 $ 42.00 2. Computation of equivalent units of material and conversion in the ending inventory: Particulars Ending work in Process Units % materials EUP Materials % conversion EUP Conversion 340 80% 272 units 40% 136 units (340 units* 80% (340 units* 40%) *EUP = Equivalent units of production 3. Computation of equivalent units of material and conversion that were required to complete beginning inventory: Particulars Beginning Workin Process Units % materials 440 30% EUP Materials % conversion 132 units 70% (440 units*30%) EUP Conversion 308 units (440 units* 70%) *EUP = Equivalent units of production

4. Computation of units started and completed during the month + Particulars Number of Units Transferred to next department Less: Number of Units in beginning inventory Units started and completed during the month Units 4,390 units (440 units) 3,950 units

5. Computation of cost of ending work in process inventory for materials, conversion, and total for the month Particulars EU (A) Cost per Total cost in $ (Equivalent EU (B) C = (A) * (B) units) Cost of Ending Work in Process Direct materials 272 units $ 18.00 $4,896 (272 units * $ 18) Conversion 136 units $24.00 $3,264 (136 units*$ 24) Total Cost of Ending Work in Process $ 8,160 6. Computation of cost of units transferred to the next department for materials, conversion, and total for the month : Particulars Costof beginning work in process Costincurred on remaining beginning work in process Cost of units started and completed during the month Cost of units transferred to next department Materials $ 4,847 $ 2,376 (132 units * $18) $ 71,100 (3,950 units *$ 18) Conversion $ 2,956 $ 7,392 (308 units*$ 24) $ 94,800 (3,950 units* $24) Total $ 7,803 $ 9,768 $1,65,900 $ 1,83,471

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