Question

Jarvene Corporation uses the FIFO method in its process costing system. The following data are for the most recent month of operations in one of the company’s processing departments:

Units in beginning inventory	390
Units started into production	4,300
Units in ending inventory	260
Units transferred to the next department	4,430

	Materials		Conversion
Percentage completion of beginning inventory	60	%	40	%
Percentage completion of ending inventory	70	%	50	%

The cost of beginning inventory according to the company’s costing system was $7,805 of which $4,801 was for materials and the remainder was for conversion cost. The costs added during the month amounted to $180,096. The costs per equivalent unit for the month were:

	Materials	Conversion
Cost per equivalent unit	$18.00	$23.00

Required:

1. Compute the total cost per equivalent unit for the month.

2. Compute the equivalent units of material and conversion in the ending inventory.

3. Compute the equivalent units of material and conversion that were required to complete the beginning inventory.

4. Compute the number of units started and completed during the month.

5. Compute the cost of ending work in process inventory for materials, conversion, and in total for the month.

6. Compute the cost of the units transferred to the next department for materials, conversion, and in total for the month.

Answer 1

Solution:

1)

Total cost per equivalent units = Material cost per equivalent units + conversion cost per equivalent units

=$18+$23

=$41

2)

Equivalent units of material and conversion in ending inventory

Materials = Units in ending inventory * percentage completion of ending inventory

=260*70%

=182

Conversion = Units in ending inventory * percentage completion of ending inventory

=260*50%

=130

3)

Equivalent units of material and conversion required to complete beginning inventory

Materials = Units in beginning inventory * percentage completion of beginning inventory

=390*40%

=156

Conversion=Units in beginning inventory * percentage completion of beginning inventory

=390*60%

=234

4)

Number of units started and completed = Number of units transferred to the next department - Number of units in beginning inventory

=4,430 -390

=4,040.

5)

Cost of ending work in process inventory

Materials (182*18)	$3,276
Conversion (130*23)	$2,990
Total cost of ending work in process inventory	$6,266

6)

Cost of units transferred to the next department:

	Materials	Conversion	Total
Cost of beginning work in process	4,801	3,004	7,805
Cost incurred on beginning work in process	2,808 (156*18)	5,382 (234*23)	8,190
Cost of units started and completed	72,720 (4,040*18)	92,920 (4,040*23)	165,640
Total cost of units transferred	$80,329	$101,306	$181,635

Please give a Thumbs up ?. Thanks!!