Question

Prepare a Production Cost Report: FIFO Method

(LO 8-2, 4, 5)

Lansing, Inc. provides the following information for one of its department’s operations for June (no new material is added in Department T):

WIP inventory—Department T
Beginning inventory (15,000 units, 60% complete with respect to Department T costs)
Transferred-in costs (from Department S) $ 116,000
Department T conversion costs 53,150
Current work (35,000 units started)
Prior department costs 280,000
Department T costs 209,050
The ending inventory has 5,000 units, which are 20 percent complete with respect to Department T costs and 100 percent complete for prior department costs.
Required

Prepare a production cost report using FIFO.

Answer 1

Reconciliation of Units (Step 1)
		% already completed		% completed this period
	Units	Departments S	Departments T	Departments S	Departments T
Beginning WIP	15000	100%	60%	0	40%
Units introduced	35000
Total Units to be accounted for	50000
Completed and Transferred unit	45000	0	0	100%	100%
Ending WIP	5000	0	0	100%	20%

Equivalent Units ( Step 20
		Department S		Department T
Units Transferred	Total Units:	% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	15000	0	0	40%	6000
From units started / introduced	30000	100%	30000	100%	30000
TOTAL	45000		30000		36000
		Department S		Department T
Ending WIP	Total Units:	% completed this period	Equivalent Units	% completed this period	Equivalent Units
TOTAL	5000	100%	5000	20%	1000
TOTAL EUP	50000		35000		37000

Cost per Equivalent unit and cost to be accounted for (Step 3)
	Department S	Department T	Total
Cost incurred in current period	280000	209050	489050
Total Equivalent Units	35000	37000
Cost per equivalent units	8	5.65
Cost of Beginning WIP	116000	53150	169150
Total cost to be accounted for			658200

Cost Report (Step 4)
	Cost of	Units Transferred		45000	units
		Equivalent Units	Cost per Equivalent Units	Cost of Units Transferred	Total
A	From Beginning WIP:
	Department S		8	0
	Department T	6000	5.65	33900	33900
B	From units started & completed
	Department S	30000	8	240000
	Department T	30000	5.65	169500	409500
C = A + B					443400
D	Cost of Beginning WIP				169150
E = C + D	Total Cost of Units Transferred				612550
	Cost of	Ending WIP
		Equivalent Units	Cost per Equivalent Units	5000	units
F	Department S	5000	8	40000
G	Department T	1000	5.65	5650
H = F + G	Total Cost of Ending WIP				45650
I = E + H	Total Cost accounted for				658200
J	Rounding Off Differences				0
K = I + J	Total cost to be accounted for [equals to computed in STEP 3]				658200