Question

Easy Inc. uses the FIFO method in its process costing system. The following data concern the operations of the company’s first processing department for a recent month.

Work in process, beginning:
Units in process		1,100
Percent complete with respect to materials		90	%
Percent complete with respect to conversion		10	%
Costs in the beginning inventory:
Materials cost	$	1,862
Conversion cost	$	1,454
Units started into production during the month		24,000
Units completed and transferred out		24,100
Costs added to production during the month:
Materials cost	$	71,521
Conversion cost	$	543,148
Work in process, ending:
Units in process		1,000
Percent complete with respect to materials		70	%
Percent complete with respect to conversion		70	%

Required:

Using the FIFO method:

a. Determine the equivalent units of production for materials and conversion costs.

b. Determine the cost per equivalent unit for materials and conversion costs.

c. Determine the cost of ending work in process inventory.

d. Determine the cost of units transferred out of the department during the month.

Answer 1

	Easy Inc.
	Production Cost Report (FIFO)
		Actual Units
	Calculation of Physical UNITS:
	Units in beginning inventory	1100
	Units started during the period	24000
	Units to be accounted for	25100
		Actual Units	Equivalent Units
			Material	CC
	Units Completed and Transferred	24100
	From units in beginning inventory	1100	110	990
	From units started	23000	23000	23000
	Units in ending inventory	1000	700	700
A)	Equivalent Unit of production	25100	23810	24690
	Costs:
		Total	Material	CC
	Costs in beginning inventory	0	0	0
	Cost added during the year	614669	71521	543148
	Total cost to account for	614669	71521	543148
	Equivalent Units from above		23810	24690
B)	Cost per equivalent unit	25.00	3.00	22.00
		Total	Material	CC
	Cost Accounted for
	Units completed and transfer	0	0	0
	From units in beginning inventory	22,109	330	21,779
	From units started	575,058	69,088	505,970
D)	Total Cost of units transferred out	597,167	69,418	527,749
C)	Units in ending inventory	17,502	2,103	15,399
	Total Cost Accounted for	614,669	71,521	543,148