Question

The Allbright BrickWorks, in Winnipeg, manufactures high-quality bricks used in residential and commercial construction. The firm is small but highly automated and typically produces about 300,000 bricks per month. A brick is created in a continuous production operation. In the initial step, the raw material, a mixture of soils and water, is forced into a brick mould moving along a conveyer belt. No other materials are required in the manufacture of a brick. Each brick takes about three days to complete. They spend the last 36 hours or so on the conveyor belt in an oven that removes moisture from the product. The conveyor belt speed is monitored and controlled by computer. The firm uses a process costing system based on actual costs in three cost pools-direct materials, direct labour, and factory overhead-to assign production costs to output. Cost and production data for October 2020 follow: Production Data Beginning work in process inventory (100% complete in terms of direct materials; 60% complete in terms of direct labour; 36% complete in terms of factory overhead) Started this period Ending work in process inventory (100% complete in terms of direct materials; 50% complete in terms of direct labour; 40% complete in terms of factory overhead) 35,000 bricks 292,900 bricks 36,000 bricks Cost Data Beginning inventory Cost in October Materials $1,340 11,716 Direct Labour Overhead $470 $810 14,445 17,622 Determine the cost of bricks transferred to finished goods inventory and the cost of bricks in ending work in process inventory for October 2020. Assume the company uses the FIFO method. (Round answers to the nearest whole dollar, e.g. 5,275. Round per unit costs to the 4 decimal places, e.g. 15.2512.) Cost of bricks transferred to finished goods inventory & Cost of bricks in ending work in process inventory A

Answer 1

Unit transferred out = 35000+292900-36000 = 291900

Equivalent unit :

	Whole Unit	Direct material	Labor	Overhead
Beginning WIP	35000	0	35000*40% = 14000	35000*64% = 22400
Unit started and completed	256900	256900	256900	256900
Ending WIP	36000	36000	18000	36000*40% = 14400
Equivalent unit	327900	292900	288900	293700

Cost per equivalent unit

	Material	Labor	Overhead
Cost added	11716	14445	17622
Equivalent unit	292900	288900	293700
Cost per equivalent unit	0.04	0.05	0.06

a) Cost of unit transferred out =

	Material	Labor	Overhead	total
Cost of unit transferred out	256900*.04+1340 = 11616	270900*.05+470 = 14015	279300*.06+810 = 17568	43199

b) Cost of ending WIP

	Material	Labor	Overhead	total
Cost of ending WIP	36000*.04 = 1440	18000*.05 = 900	14400*.06 = 864	3204