Question

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 (9,000 units)
Transferred-in from Molding	$	103,000			100	%
Direct materials costs		167,000			50
Conversion costs		60,000			50
Work-in-process balance (August 1)	$	330,000

During August, 101,000 units were transferred in from the Molding Department at a cost of $2,121,000 and started in Assembling. The Assembling Department incurred other costs of $1,069,410 in August as follows:

	August Costs
Direct materials costs	$	851,160
Conversion costs		218,250
Total August costs	$	1,069,410

At the end of August, 17,000 units remained in inventory that were 90 percent complete with respect to direct materials and 50 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.

1. What is the cost of goods transferred out?_______

2. Cost of WIP ending inventory? _______

Answer 1

Final answer:	Cost of goods transferred Out	924,825
	Cost of WIP Inventory	144,585
	Working Note:
	Pantanal Inc.
		Actual Units
	Calculation of Physical UNITS:
	Units in beginning inventory	9000
	Units started during the period	101000
	Units to be accounted for	110000
		Actual Units	Equivalent Units
			Material	CC
	Units Completed and Transferred	93000
	From units in beginning inventory	9000	4500	4500
	From units started	84000	84000	84000
	Units in ending inventory	17000	15300	8500
	Equivalent Unit of production	110000	103800	97000
	Costs:
		Total	Material	CC
	Costs in beginning inventory	0	0	0
	Cost added during the year	1069410	851160	218250
	Total cost to account for	1069410	851160	218250
	Equivalent Units from above		103800	97000
	Cost per equivalent unit	10.45	8.20	2.25
		Total	Material	CC
	Cost Accounted for
	Units completed and transfer	0	0	0
	From units in beginning inventory	47,025	36,900	10,125
	From units started	877,800	688,800	189,000
	Total Cost of units transferred out	924,825	725,700	199,125
	Units in ending inventory	144,585	125,460	19,125
	Total Cost Accounted for	1,069,410	851,160	218,250