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 (11,000 units)
Transferred-in from Molding	$	98,000			100	%
Direct materials costs		157,000			70
Conversion costs		59,000			50
Work-in-process balance (August 1)	$	314,000

During August, 106,000 units were transferred in from the Molding Department at a cost of $2,024,600 and started in Assembling. The Assembling Department incurred other costs of $954,505 in August as follows:

	August Costs
Direct materials costs	$	800,280
Conversion costs		154,225
Total August costs	$	954,505

At the end of August, 20,000 units remained in inventory that were 80 percent complete with respect to direct materials and 40 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. (Do not round intermediate calculations.)

	Cost of goods transferred out Cost of WIP ending inventory

Answer 1

Solution:

Pantanal Inc.
Assembling department
Computation of Equivalent unit (FIFO)
Particulars	Physical units	Transferred In	Material	Conversion
Units to be accounted for:
Beginning WIP Inventory	11000
Units started this period	106000
Total unit to be accounted for	117000
Units Accounted for:
Units completed and transferred out
From beginning inventory Transferred in - 0% Material - 30% Conversion - 50%	11000	0	3300	5500
Started and completed currently	86000	86000	86000	86000
Units in ending WIP Tranferred in - 100% Material - 80% Conversion - 40%	20000	20000	16000	8000
Total units accounted for	117000	106000	105300	99500

Pantanal Inc.
Assembling department
Computation of Cost per Equivalent unit
Particulars	Total cost	Transferred In	Material	Conversion
Current period cost	$2,979,105.00	$2,024,600.00	$800,280.00	$154,225.00
Equivalent units		$106,000.00	105300	99500
Cost per equivalent unit		$19.10	$7.60	$1.55

Pantanal Inc.
Assembling department
Producton cost report - FIFO
Particulars	Total cost	Transferred In	Material	Conversion
Cost Accounted for :
Cost assigned to unit transferred out:
Cost from beginning WIP Inventory	$314,000	$98,000.00	$157,000	$59,000
Current cost added to complete beginning WIP:
Transferred In	$0	$0.00
Material (3300*$7.60)	$25,080		$25,080
Conversion (5500 * $1.55)	$8,525			$8,525
Total Cost from beginning inventory	$347,605	$98,000	$182,080	$67,525
Current cost of unit started and completed:
Transferred In (86000*$19.10)	$1,642,600	$1,642,600.00
Material (86000*$7.60)	$653,600		$653,600
Conversion (86000*$1.55)	$133,300			$133,300
Total cost of unit started and completed	$2,429,500	$1,642,600	$653,600	$133,300
Total cost of unit transferred out	$2,777,105	$1,740,600	$835,680	$200,825
Cost assigned to ending WIP:
Transferred In (20000*$19.10)	$382,000	$382,000.00
Material (16000*$7.60)	$121,600		$121,600
Conversion (8000*$1.55)	$12,400			$12,400
Total ending WIP inventory	$516,000	$382,000	$121,600	$12,400
Total cost accounted for	$3,293,105	$2,122,600	$957,280	$213,225

Refer above production cost report:

Cost of goods transferred out = $2,777,105

Cost of WIP ending inventory = $516,000