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Travelers FIFO Method, Physical Flow, Equivalent Units, Unit Costs, Cost Assignment Swasey Fabrication, Inc., manufactures frames for bicycles. Each frame passes through three processes: Cutting, Welding, and Painting. In September, the Cutting Department of the Tulsa, Oklahoma, plant reported the following data: a. In Cutting, all direct materials are added at the beginning of the process. b. Beginning work in process consisted of 41,000 units, 20 percent complete with respect to direct labor and overhead. Costs in beginning inventory included direct materials, $1,215,000; direct labor, $223,000; and applied overhead, $150,000. c. Costs added to production during the month were direct materials, $2,565,000; direct labor, $3,471,050. Overhead was assigned using the following information: Activity Rate Actual Driver Usage Inspection $150 per inspection hour 4,000 inspection hours Maintenance $750 per maintenance hour 1,600 maintenance hours Receiving $300 per receiving order 2,000 receiving orders d. At the end of the month, 122,000 units were transferred out to Welding, leaving 14,000 units in ending work in process, or 25 percent complete. Assume that the FIFO method is used. Required: < 1. Prepare a physical flow schedule. Swasey Fabrication, Inc. Check My Work 1 more Check My Work uses remaining Copyright 2002-2019 by Matrix Software, Inc. All rights reserved. ViewSonic nike mills VFw Stacy Lewis Shan Scott Birthdays: Rich Dad 315 Stephanie 2/21 Kimmie 3/3

Answer 1

2)	Equivalent units of production
	Direct Materials			95000
	Conversion Costs			117300

3)

Unit Cost

$ 77.052

4)	Cost of Goods Transferred			$       94,70,918
	Cost of Ending Inventory			$         5,53,182

Workings:

2)	Statement of equivalent production					Degree of completion
						Direct Material			Conversion
	Particulars	Units	Particulars	Units		%	Units		%	Units
	Beginning WIP	41000	Transfer to next process:
	Units Started	95000	From Beginning WIP	41000		-	-		80%	32800
			From Units Started	81000		100%	81000		100%	81000
			Ending WIP	14000		100%	14000		25%	3500
		136000		136000			95000			117300

3)	Statement of cost per equivalent production
	Element of costs	Units	Costs	Cost/eq. units
	Direct Material	95000	$ 25,65,000.00	$             27.000
	Conversion	117300	$ 58,71,050.00	$             50.052
				$             77.052

4)	Cost of Finished Goods
	Existing cost of 41000 units =		$ 15,88,000.00	($ 1215000 + $ 223000 + $ 150000)
	Cost of Completing 32800 units:
	Conversion cost =		$ 16,41,705.60	(32800 x $ 50.052)
	Cost of 81000 units =		$ 62,41,212.00	(81000 x $ 77.052)
		Total	$ 94,70,917.60

5)	Cost of Ending WIP
		Units	Cost/eq. units	Costs
	Direct Material	14000	$             27.000	$ 3,78,000.00
	Conversion	3500	$             50.052	$ 1,75,182.00
			Total	$5,53,182.00

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