In: Accounting
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.
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