Question

Tamar Co. manufactures a single product in one department. All direct materials are added at the beginning of the manufacturing process. Conversion costs are added evenly throughout the process. During May, the company completed and transferred 32,200 units of product to finished goods inventory. Its 5,000 units of beginning work in process consisted of $201,500 of direct materials and $440,104 of conversion costs. It has 3,400 units (100% complete with respect to direct materials and 80% complete with respect to conversion) in process at month-end. During the month, $688,500 of direct material costs and $3,680,456 of conversion costs were charged to production.

• Beginning work in process consisted of 5,000 units that were 100% complete with respect to direct materials and 40% complete with respect to conversion.
• Of the 32,200 units completed, 5,000 were from beginning work in process. The remaining 27,200 were units started and completed during May.

Assume that Tamar uses the FIFO method to account for its process costing system.

1. Prepare the company’s process cost summary for May using the FIFO method. (Round "Cost per EUP" to 2 decimal places.)

2. Prepare the journal entry dated May 31 to transfer the cost of completed units to finished goods inventory.

Answer 1

UNITS TO ACCOUNT FOR:
Beginning Work in Process units				5,000
Add: Units Started in Process				30,600
Total Units to account for:				35,600
UNITS TO BE ACCOUNTED FOR:
Units completed from Beginning WIP				5000
Units started and completed				27,200
Ending Work in Process				3,400
Total Units to be accounted for:				35,600
Equivalent Units:
			Material Cost		Conversion
			% Completion	Units	% Completion	Units
Units completed from Beg. WIP			0%	0	60%	3,000
Units started and completed			100%	27,200	100%	27,200
Ending Work in Process			100%	3,400	80%	2,720
Total Equivalent units				30,600		32,920
COST PER EQUIVALENT UNIT:
			Material		Conversion
Total cost added during the year			688,500		3,680,456
Equivalent Units			30,600		32,920
Cost per Equivalent unit			22.5		111.8
TOTAL COST ACCOUNTED FOR:
Units Completed from Beginning WIP (5000 units)
			Equivalent unit	Cost per EU	Total Cost
Beginning Cost					641604
Material			0	22.5	0
Conversion Cost			3,000	111.8	335400
Cost of units completed from Beg WIP					977004
Units started and Transferred out (27200 units)
			Equivalent unit	Cost per EU	Total Cost
Material			27,200	22.5	612000
Conversion Cost			27,200	111.8	3040960
Total Cost of Units completed and transferred out:					3652960
Ending Work in process (3400 units)
			Equivalent unit	Cost per EU	Total Cost
Material			3,400	22.5	76500
Conversison Cost			2,720	111.8	304096
Total cost of Ending Work in process:					380,596
Journal entry:
Finished Goods inventory			(977004+3652960)		4629964
Work in process account						4629964