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In: Accounting

Pantanal, Inc., manufactures car seats in a local factory. For costing purposes, it uses a first-in,...

Pantanal, Inc., manufactures car seats in a local factory. For costing purposes, it uses a first-in, first-out (FIFO) process costing system. The factory has three departments: Molding, Assembling, and Finishing. Following is information on the beginning work-in-process inventory in the Assembling Department on August 1:

Costs Degree of Completion
Work-in-process beginning inventory (11,000 units)
Transferred-in from Molding $ 99,000 100 %
Direct materials costs 165,200 60
Conversion costs 62,000 40
Work-in-process balance (August 1) $ 326,200

During August, 107,000 units were transferred in from the Molding Department at a cost of $2,107,900 and started in Assembling. The Assembling Department incurred other costs of $1,005,660 in August as follows:

August Costs
Direct materials costs $ 805,120
Conversion costs 200,540
Total August costs $ 1,005,660

At the end of August, 13,000 units remained in inventory that were 80 percent complete with respect to direct materials and 60 percent complete with respect to conversion.

Required:

Compute the cost of goods transferred out in August and the cost of work-in-process ending inventory. (Do not round intermediate calculations.)

Solutions

Expert Solution

solution:-

cost of goods transfer out:--

Existing cost of 11000 units =

$ 326200 ( $99000+ $165200+ $62000)

(A) Cost of completing incomplete units :-Materialcost $ 86680 (4400× $19.7)

Conversationcost $ 47982 (6600× $ 7.27)

Cost of 94000 unit. $ 1,73,900 (94000×$ 1.85)

   Total $ 308562

(B) Cost of ending WIP :-

Units. Cost/eq.Units. Costs.

Transferred in 13,000 $ 19.7. $ 2,56,100

Materials 12,400 $ 7.27. $. 90,148

Conversation. 7,800. $ 1.85. $. 14,430

Total. $.   360678

Working notes:-

1- statement of equivalent production:--

Particular Units.

Opening WIP 11000

Cars Commenced. 10000

Particulars. Units

Transfer to next process

From o/p to Wip. 11000

Fromcars commenced. 94000

Closing Wip. 13000

1,18,000

Degree of completions

Particulars transferredin. Material Conversion %. Units. %. Units . %. Units

o/p to wip ----- ----. 40% 4,400 60% 6,600 car comm.100% 94,000. 100%94,000 100% 94,000

Closing wip100% 1300080% 12,400 60% 7,800

​​​ 1,07,000   1,10,800. 1,08,400

(2) statement of cost per equivalent production

Elementofcost. Units. CoSts. Cost /eq.units

Transferred i 1,07,000 $2,10,7900. $ 19.7

Materials. 1,10,800 $ 8,05,120. $ 7.27

Conversion. 1,08,400 $ 2,00,540. $ 1.85

Hence

Answer 1-cost of goods transfer out is $3,08,562.

Answer 2- cost of ending wip is $ 3,60,678..

ekkarill92 answered 2 years ago
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