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Schrader Cellars uses the FIFO method in its two department process costing system: Fermenting (grape sorting...

Schrader Cellars uses the FIFO method in its two department process costing system: Fermenting (grape sorting is part of the fermentation process) and Packaging. Direct materials (grapes) are added at the beginning of the fermenting process and at the end of the packaging process (bottles). Conversion costs are added evenly throughout each process. Data from the month of december for the Fermenting Department are below:

Beginning work in process inventory:

            Units in beginning work in process inventory            3,000 gallons

            Materials costs                                                            $122,000

            Conversion costs                                                         $7,000

            Percentage complete with respect to materials           100%

            Percentage complete with respect to conversion        50%

Units started into production during the month                      5,000 gallons

Materials costs added during the month                                 $250,000

Conversion costs added during the month                             $30,000

Ending work in process inventory:

            Units in ending work in process                                 2,000 gallons

            Percentage complete with respect to materials           100%

            Percentage complete with respect to conversion        75%

REQUIRED:

  1. Prepare a FIFO production report for the Fermentation Department for Schrader Cellars for the month ended December 31, 2018.

Schrader Cellars uses the FIFO method in its two department process costing system: Fermenting (grape sorting is part of the fermentation process) and Packaging. Direct materials (grapes) are added at the beginning of the fermenting process and at the end of the packaging process (bottles). Conversion costs are added evenly throughout each process. Data from the month of december for the Fermenting Department are below:

Beginning work in process inventory:

            Units in beginning work in process inventory            3,000 gallons

            Materials costs                                                            $122,000

            Conversion costs                                                         $7,000

            Percentage complete with respect to materials           100%

            Percentage complete with respect to conversion        50%

Units started into production during the month                      5,000 gallons

Materials costs added during the month                                 $250,000

Conversion costs added during the month                             $30,000

Ending work in process inventory:

            Units in ending work in process                                 2,000 gallons

            Percentage complete with respect to materials           100%

            Percentage complete with respect to conversion        75%

REQUIRED:

  1. Prepare a FIFO production report for the Fermentation Department for Schrader Cellars for the month ended December 31, 2018.

Solutions

Expert Solution

ANSWER:-

UNITS TO ACCOUNT FOR:
Beginning Work in Process units 3,000
Add: Units Started in Process 5,000
Total Units to account for: 8,000
UNITS TO BE ACCOUNTED FOR:
Units completed from Beginning WIP 3000
Units started and completed 3,000
Ending Work in Process 2,000
Total Units to be accounted for: 8,000
Equivalent Units:
Material Cost Conversion
% Completion Units % Completion Units
Units completed from Beg. WIP 0% 0 50% 1,500
Units started and completed 100% 3,000 100% 3,000
Ending Work in Process 100% 2,000 75% 1,500
Total Equivalent units 5,000 6,000
COST PER EQUIVALENT UNIT:
Material Conversion
Total cost added during the year 250,000 30,000
Equivalent Units 5,000 6,000
Cost per Equivalent unit 50 5
TOTAL COST ACCOUNTED FOR:
Units Completed from Beginning WIP (3000 units)
Equivalent unit Cost per EU Total Cost
Beginning Cost 129000
Material 0 50 0
Conversion Cost 1,500 5 7500
Cost of units completed from Beg WIP 136500
Units started and Transferred out (3000 units)
Equivalent unit Cost per EU Total Cost
Material 3,000 50 150000
Conversion Cost 3,000 5 15000
Total Cost of Units completed and transferred out: 165000
Ending Work in process (2,000 units)
Equivalent unit Cost per EU Total Cost
Material 2,000 50 100000
Conversison Cost 1,500 5 7500
Total cost of Ending Work in process: 107,500

ekkarill92 answered 6 months ago
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