Question

In: Accounting

Stocks Corporation has the following information available for June of the current year: Beginning WorkinProcessInventory(20% complete...

Stocks Corporation has the following information available for June of the current year:

Beginning WorkinProcessInventory(20% complete as to conversion)12,000units

Started150,000units

EndingWork inProcessInventory(25% complete as to conversion)35,000units

BeginningWork inProcessInventoryCosts:

Material$ 2,500

Conversion2,650

CurrentPeriodCosts:

Material$ 36,000

Conversion112,750

All material is added at the start of production and all products completed are transferred out.

a. Refer to Stocks Corporation. Prepare a schedule showing the computation for cost per equivalent unit assuming FIFO

b. Refer to Stocks Corporation. Prepare a schedule showing the assignment of costs assuming FIFO.

Solutions

Expert Solution

Production = 12000 + 150000 - 35000 = 127000 units were transfered out

Using the FIFO method we take it as 12000 of beginning inventory is finished and remaining 115000 were out those started during the period.

Equivalent Units are calculated as

        MATERIAL         CONVERSION
Units Transferred out Units % Units %
Beginning WIP 12000 0 0 9600 80
Started and finished 115000 115000 100 115000 100
Ending WIP 35000 35000 100 8750 25
Total EUP (A) 150000 133350
Current Period cost (B) 36000 112750
Cost per EUP .. B/A 0.24 0.845519

schedule showing the assignment of costs

Cost of units transferred out EUP Cost per EUP Total cost
Beginning WIP 5150
Cost Incurred to complete
Material 0 0.24 0
conversion 9600 0.845519 8117
Total cost of Beginning WIP 13267
started and finished
Material 115000 0.24 27600
conversion 115000 0.845519 97235
Total cost of started and fin 124835
Total cost of transferred out 138102
Ending WIP
Material 35000 0.24 8400
conversion 8750 0.845519 7398
Total cost of ending WIP 15798
Total cost assigned 153900

Check the accuracy of the solution by adding Beginning WIP + Current costs = 153900

i.e 5150 + 36000 + 112750 = 153900


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