Question

Exercise 5S-9 Equivalent Units; Equivalent Units of Production; Assigning Costs-FIFO Method [LO5S-6, LO5S-7, LO5S-8]

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	410
Units started into production	4,280
Units in ending inventory	290
Units transferred to the next department	4,400

	Materials		Conversion
Percentage completion of beginning inventory	70	%	30	%
Percentage completion of ending inventory	80	%	40	%

The cost of beginning inventory according to the company’s costing system was $7,849 of which $4,841 was for materials and the remainder was for conversion cost. The costs added during the month amounted to $179,249. The costs per equivalent unit for the month were:

	Materials	Conversion
Cost per equivalent unit	$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 = 18+23 = 41

2) Equivalent unit of material and conversion

	Material	Conversion
Ending inventory	290*80% = 232	290*40% = 116

3) Equivalent unit of material and conversion

	Material	Conversion
Beginning inventory	410*30% = 123	410*70% = 287

4) Unit started and completed = 4400-410 = 3990

5) Cost of ending WIP

	Material	Conversion	Total
Cost of ending WIP	232*18 = 4176	116*23 = 2668	6844

6) Cost of units transferred to next department

	Material	Conversion	Total
Cost of Unit transferred out	(123+3990)*18 = 74034+4841 = 78875	(287+3990)*23 = 98371+3008 = 101379	180254