Question

The Matsui Lubricants plant uses the FIFO method to account for its work-in-process inventories. The accounting records show the following information for a particular day:

Beginning WIP inventory
Direct materials	$	985
Conversion costs		572
Current period costs
Direct materials		27,275
Conversion costs		18,722

Quantity information is obtained from the manufacturing records and includes the following:

Beginning inventory	850	units	(70% complete as to materials, 60% complete as to conversion)
Current period units started	6,000	units
Ending inventory	1,600	units	(50% complete as to materials, 20% complete as to conversion)

Required:

(1) Compute the equivalent units for the materials and conversion cost calculations.

(2) Compute the cost per equivalent unit for direct materials and for conversion costs using the FIFO method. (Round your answers to 2 decimal places.)

(3) Compute the cost of goods transferred out and the ending inventory using the FIFO method. (Do not round intermediate calculations.)

Answer 1

UNITS TO ACCOUNT FOR:
Beginning Work in Process units			850
Add: Units Started in Process			6,000
Total Units to account for:			6,850
UNITS TO BE ACCOUNTED FOR:
Units completed from beginning WIP		850
Units started and completed			4,400
Ending Work in Process			1,600
Total Units to be accounted for:		6,850
Equivalent Units:
			UNITS	Material Cost	Conversion
				% Completion	Units	% Completion	Units
Units completed from Beg.	850	30%	255	40%	340
Units started and completed	4400	100%	4,400	100%	4,400
Ending Work in Process	1600	50%	800	20%	320
Total Equivalent units	6850		5,455		5,060
TOTAL COST TO ACCOUNT FOR:
				Material		Conversion
Cost Added during May		27,275		18,722
Total Cost to account for:		27,275		18,722
Equivalent Units			5,455		5,060
Cost per Equivalent unit		5		3.7
TOTAL COST ACCOUNTED FOR:
Units completed from Beg. Wip (850 units)
				Equivalent unit	Cost per EU	Total Cost
Cost of beginning WIP				1557
Material				255	5	1275
Conversion Cost			340	3.7	1258
Total cost to complete beginning WIP			4090
Units started and completed (4400 units)
				Equivalent unit	Cost per EU	Total Cost
Material				4,400	5	22000
Conversion Cost			4,400	3.7	16280
Total cost of units started and complted			38280
Total cost of units transferred out			42370
Ending Work in process (1600 units)
				Equivalent unit	Cost per EU	Total Cost
Material				800	5	4000
Conversison Cost			320	3.7	1184
Total cost of Ending Work in process:			5,184