Question

Daosta Inc. uses the FIFO method in its process costing system. The following data concern the operations of the company's first processing department for a recent month.

Work in process, beginning:
Units in process		900
Percent complete with respect to materials		40	%
Percent complete with respect to conversion		20	%
Costs in the beginning inventory:
Materials cost	$	530
Conversion cost	$	2108
Units started into production during the month		16,000
Units completed and transferred out		16,000
Costs added to production during the month:
Materials cost	$	32,180
Conversion cost	$	416,512
Work in process, ending:
Units in process		900
Percent complete with respect to materials		50	%
Percent complete with respect to conversion		50	%

Required:

Using the FIFO method:

a. Determine the equivalent units of production for materials and conversion costs (Do not enter commas in answer for example 5,000 should be entered as 5000).

	Equivalent Units of Production
Materials
Conversion

b. Determine the cost per equivalent unit for materials and conversion costs (Round to 2 decimal places).

	Cost per Equivalent Unit
Materials
Conversion

c. Determine the cost of ending work in process inventory (Round to the nearest whole dollar and do not enter dollar signs or commas in answer for example $5,000 should be entered as 5000).

Cost of ending WIP

d. Determine the cost of units transferred out of the department during the month (Round to the nearest whole dollar and do not enter dollar signs or commas in answer for example $5,000 should be entered as 5000).

Cost of units transferred out

Answer 1

Solution a:

Daosta Inc.
First Processing Department
Computation of Equivalent unit (FIFO)
Particulars	Physical units	Material	Conversion
Units to be accounted for:
Beginning WIP Inventory	900
Units started this period	16000
Total unit to be accounted for	16900
Units Accounted for:
Units completed and transferred out
From beginning inventory Material - 60% Conversion - 80%	900	540	720
Started and completed currently	15100	15100	15100
Units in ending WIP Material - 50% Conversion - 50%	900	450	450
Total units accounted for	16900	16090	16270

Solution b:

Daosta Inc.
First Processing Department
Computation of Cost per Equivalent unit
Particulars	Total cost	Material	Conversion
Current period cost	$448,692.00	$32,180.00	$416,512.00
Equivalent units		16090	16270
Cost per equivalent unit		$2.00	$25.60

Solution c&d:

Daosta Inc.
First Processing Department
Producton cost report - FIFO
Particulars	Total cost	Material	Conversion
Cost Accounted for :
Cost assigned to unit transferred out:
Cost from beginning WIP Inventory	$2,638	$530	$2,108
Current cost added to complete beginning WIP:
Material (540*$2)	$1,080	$1,080
Conversion (720 * $25.60)	$18,432		$18,432
Total Cost from beginning inventory	$22,150	$1,610	$20,540
Current cost of unit started and completed:
Material (15100*$2)	$30,200	$30,200
Conversion (15100*$25.60)	$386,560		$386,560
Total cost of unit started and completed	$416,760	$30,200	$386,560
Total cost of unit transferred out	$438,910	$31,810	$407,100
Cost assigned to ending WIP:
Material (450*$2)	$900	$900
Conversion (450*$25.60)	$11,520		$11,520
Total ending WIP inventory	12,420	900	11,520
Total Cost accounted for	$451,330	$32,710	$418,620

Refer above production cost report:

Cost of ending WIP = $12,420

Cost of units transferred out = $438,910