Question

FIFO Method, Valuation of Goods Transferred Out and Ending Work in Process

K-Briggs Company uses the FIFO method to account for the costs of production. For Crushing, the first processing department, the following equivalent units schedule has been prepared:

		Direct Materials				Conversion Costs
Units started and completed			25,000				25,000
Units, beginning work in process:
10,000 × 0%			—				—
10,000 × 40%			—				4,000
Units, ending work in process:
6,000 × 100%			6,000				—
6,000 × 75%			—				4,500
Equivalent units of output			31,000				33,500

The cost per equivalent unit for the period was as follows:

Direct materials		$2.00
Conversion costs		6.00
Total		$8.00

The cost of beginning work in process was direct materials, $40,000; conversion costs, $30,000.

Required:

1. Determine the cost of ending work in process.
$39,000 (Answer)

Determine the cost of goods transferred out.
$

2. Prepare a physical flow schedule.

K-Briggs Company
Physical Flow Schedule
Units to account for:
Units, beginning work in process $10,000 (Answer)
Units started
Total units to account for
Units accounted for:
Units completed:
Started and completed
Units, beginning work in process
Units, ending work in process
Total units accounted for

Answer 1

• All working forms part of the answer
• Requirement 1

Ending WIP
	Equivalent Units	Cost per Equivalent units	Total cost
Direct Material	6,000	$                     2.00	$           12,000.00
Conversion cost	4,500	$                     6.00	$           27,000.00
Total cost of ending WIP			$           39,000.00

Cost of Units Transferred
	Equivalent Units	Cost per Equivalent units	Total cost
Direct Material	25,000	$                     2.00	$           50,000.00
Conversion cost	29,000	$                     6.00	$        174,000.00
Total current cost of Goods transferred			$        224,000.00
Add: Cost of Beginning WIP [40000 + 30000]			$           70,000.00
Total Cost of Goods Transferred Out			$        294,000.00 =ANSWER

• Requirement 2

K-Briggs Company
Physical Flow Schedule
Units to account for:
Units, beginning work in process	10,000
Units started	31,000
Total units to account for	41,000
Units accounted for:
Units completed:
Started and completed	25,000
Units, beginning work in process	10,000
Units, ending work in process	6,000
Total units accounted for	41,000