Question

Betty DeRose, Inc. operates two departments, the handling department and
the packaging department. During April, the handling department reported
the following information:

                                           % complete      % complete
                                units         DM           conversion 
work in process, April 1        19,000        80%             35%
units completed during April    71,000
work in process, April 30       11,000        45%             70%

The cost of beginning work in process and the costs added during April
were as follows:

                               Direct materials      Conversion
work in process, April 1          $139,810               ???
costs added during April           376,650               ???
total costs                        516,460               ???

Using weighted average, the cost of goods completed and transferred out
for the handling department totaled $880,400. Using FIFO, the handling
department's work in process inventory balance at April 30 was $64,570.

Calculate the total cost of the 19,000 units in beginning work in process
using the FIFO process costing method.

Answer 1

Completed units for direct material consumption purpose:

1st April	19000	80%	15200	During April	Finished Units		71000
	Process during the month (balancing figure)		60750	30th April	11000	45%	4950
			75950				75950

Completed units for conversion purpose:

1st April	19000	35%	6650	During April	Finished Units		71000
	Process during the month (balancing figure)		72050	30th April	11000	70%	7700
			78700				78700

Avg. cost of goods completed = 880400/71000 = 12.40

Avg. cost for Direct material = (139810+376650)/75950 = 6.80

Avg. cost for conversion purpose = 12.40-6.80 = 5.60

Hence total cost of conversion =               78700*5.60 = 440720

Valuation as per weighted average

Opening cost of material	139810	Units completed (71000*12.40)	880400
Cost added during the month	376650	Closing WIP
Cost of conversion	440720	Direct material (4950*6.80)	33660
		Conversion cost (7700*5.60)	43120
	957180		957180

Valuation as per FIFO:

WIP closing valuation                                                                                     64570

which consist of DM (376650/60750) = 6.20 (4950*6.20) =           30690

valuation of conversion cost = (64570-30690)/7700 = 4.40 =          33880

Conversion cost break up:

Opening                                              123700

during the month (72050*4.4) = 317020

                                                         -----------------

                                                                440720

                                                        ------------------

Total cost of 19000 units in beginning work in progress = 123700+139810

                                                                                                           = 263510