Question

1.CG manufacturing company has two processes: Assembly followed by Packaging. The following details are with respect to the Packaging process for the month of January, 2019. There was no beginning inventory. Transferred-in costs from the Assembly department during the month of January was $2,000,000. 10,000 units were packed and sent to the Finished Goods warehouse during January. 2,500 units were still in process in the Packaging department as of end of January. There was no spoilage. What was the transferred-in cost per equivalent unit for the Packaging department for the month of January, 201?

1. $200

2. $160

3. $800

4. Cannot be determined with the given data.

2. For a given department, which of the following items is most likely to be a component of “transferred-in costs from the prior processing department” under FIFO?

1. Conversion costs incurred by the given department

2. The cost of materials requisitioned and used by the given department

3. Value of the beginning inventory in the prior processing department

4. Conversion costs incurred by the next processing department

Answer 1

Answer 1
Units completed and sent to finished Goods	10,000
Add: ending work in progress	2,500
Total unit accounted for	12,500
Units in beginning WIP inventory	0
Units transferred from the Assembly department	12,500
Transferred-in costs from the Assembly department	$        2,000,000
Divided by: Units transferred from the Assembly department	12,500
Transferred-in cost per equivalent unit	$                    160
Answer 2
Correct answer:
Value of the beginning inventory in the prior processing department
Conversion costs incurred is included in the ending working in progress in the prior processing department and costs transferred to next department.
The cost of materials requisitioned and used by processing department is included in the ending working in progress and costs transferred to next department.
Value of the beginning inventory in the prior processing department must be transferred to the next department. Because as per FIFO method, beginning units first transferred to next department.
Conversion costs incurred by next department is not part of the transferred-in costs. It is considered as conversion cost for next department.