Question

FIFO Method, Physical Flow, Equivalent Units, Unit Costs, Cost Assignment Swasey Fabrication, Inc., manufactures frames for bicycles. Each frame passes through three processes: Cutting, Welding, and Painting. In September, the Cutting Department of the Tulsa, Oklahoma, plant reported the following data: In Cutting, all direct materials are added at the beginning of the process. Beginning work in process consisted of 41,000 units, 20 percent complete with respect to direct labor and overhead. Costs in beginning inventory included direct materials, $1,215,000; direct labor, $223,000; and applied overhead, $150,000. Costs added to production during the month were direct materials, $2,575,000; direct labor, $3,471,250. Overhead was assigned using the following information: Activity Rate Actual Driver Usage Inspection $150 per inspection hour 4,000 inspection hours Maintenance $750 per maintenance hour 1,600 maintenance hours Receiving $300 per receiving order 2,000 receiving orders At the end of the month, 122,000 units were transferred out to Welding, leaving 14,000 units in ending work in process, or 25 percent complete. Assume that the FIFO method is used.

FIFO Method, Physical Flow, Equivalent Units, Unit Costs, Cost Assignment

Swasey Fabrication, Inc., manufactures frames for bicycles. Each frame passes through three processes: Cutting, Welding, and Painting. In September, the Cutting Department of the Tulsa, Oklahoma, plant reported the following data:

In Cutting, all direct materials are added at the beginning of the process.

Beginning work in process consisted of 41,000 units, 20 percent complete with respect to direct labor and overhead. Costs in beginning inventory included direct materials, $1,215,000; direct labor, $223,000; and applied overhead, $150,000.

Costs added to production during the month were direct materials, $2,575,000; direct labor, $3,471,250. Overhead was assigned using the following information:

Activity		Rate		Actual Driver Usage
Inspection		$150 per inspection hour		4,000 inspection hours
Maintenance		$750 per maintenance hour		1,600 maintenance hours
Receiving		$300 per receiving order		2,000 receiving orders

At the end of the month, 122,000 units were transferred out to Welding, leaving 14,000 units in ending work in process, or 25 percent complete.

Assume that the FIFO method is used.

Required:

1. Prepare a physical flow schedule.

Prepare a physical flow schedule.

Swasey Fabrication, Inc.
Physical Flow Schedule
Units to account for:
Units, beginning work in process
Units started (transferred in)
Total units to account for
Units accounted for:
Units completed and transferred out
Units, ending work in process
Total units accounted for

2. Calculate equivalent units of production for direct materials and conversion costs.

	Equivalent Units
Direct Materials
Conversion Costs

3. Compute unit cost. Round unit costs & final answer to three decimal places.
$ per unit

4. Calculate the cost of goods transferred to Painting at the end of the month. In your calculations, round unit costs to three decimal places. Round your final answer to the nearest dollar.
$

Calculate the cost of ending inventory. In your calculations, round unit costs to three decimal places. Round your final answer to the nearest dollar.
$

Answer 1

UNITS TO ACCOUNT FOR:
Beginning Work in Process units				41,000
Add: Units Started in Process				95,000
Total Units to account for:				136,000
UNITS TO BE ACCOUNTED FOR:
Units completed from Beginning WIP				41000
Units started and completed				81,000
Ending Work in Process				14,000
Total Units to be accounted for:				136,000
Equivalent Units:
			Material Cost		Conversion
			% Completion	Units	% Completion	Units
Units completed from Beg. WIP			0%	0	80%	32,800
Units started and completed			100%	81,000	100%	81,000
Ending Work in Process			100%	14,000	25%	3,500
Total Equivalent units				95,000		117,300
COST PER EQUIVALENT UNIT:							Total Conversion cost:
			Material		Conversion		labour cost			3471250
Total cost added during the year			2,575,000		5,871,250		OH cost:
Equivalent Units			95,000		117,300		Inspections (4000*150)			600000
Cost per Equivalent unit			27.11		50.05		maintenance (1600*750)			1200000
							Receiving (2000*300)			600000
TOTAL COST ACCOUNTED FOR:							Total Conversion cost:			5871250
Units Completed from Beginning WIP (41000 units)
			Equivalent unit	Cost per EU	Total Cost
Beginning Cost					1588000
Material			0	27.11	0
Conversion Cost			32,800	50.05	1641640
Cost of units completed from Beg WIP					3229640
Units started and Transferred out (81000 units)
			Equivalent unit	Cost per EU	Total Cost
Material			81,000	27.11	2195910
Conversion Cost			81,000	50.05	4054050
Total Cost of Units completed and transferred out:					6249960
Ending Work in process (14,000 units)
			Equivalent unit	Cost per EU	Total Cost
Material			14,000	27.11	379540
Conversison Cost			3,500	50.05	175175
Total cost of Ending Work in process:					554,715
Req 4.
Cost of finished goods transfrred out (3229640+6249960):						9479600
Cost of ending inventory:						554715