Question

In: Accounting

The Matsui Lubricants plant uses the FIFO method to account for its work-in-process inventories. The accounting...

The Matsui Lubricants plant uses the FIFO method to account for its work-in-process inventories. The accounting records show the following information for a particular day.

Beginning WIP inventory
Direct materials $ 980
Conversion costs 287
Current period costs
Direct materials 11,285
Conversion costs 7,287

Quantity information is obtained from the manufacturing records and includes the following.

Beginning inventory 500 units (60% complete as to materials,
56% complete as to conversion)
Current period units started 4,100 units
Ending inventory 1,000 units (40% complete as to materials,
15% complete as to conversion)

Compute the cost of goods transferred out and the ending inventory using the FIFO method. (Do not round intermediate calculations.)

Solutions

Expert Solution

Matsui Lubricants
Computation of Equivalent unit (FIFO)
Particulars Physical units Material Conversion
Units to be accounted for:
Beginning WIP Inventory 500
Units started this period 4100
Total unit to be accounted for 4600
Units Accounted for:
Units completed and transferred out
From beginning inventory
Material - 40%
Conversion - 44%
500 200 220
Started and completed currently 3100 3100 3100
Transferred to finished goods 3600 3300 3320
Units in ending WIP
Material - 40%
Conversion - 15%
1000 400 150
Total units accounted for 4600 3700 3470
Matsui Lubricants
Computation of Cost per Equivalent unit
Particulars Total cost Material Conversion
Current period cost $18,572.00 $11,285.00 $7,287.00
Equivalent units 3700 3470
Cost per equivalent unit $3.05 $2.10
Matsui Lubricants
Producton cost report - FIFO
Particulars Total cost Material Conversion
Cost Accounted for :
Cost assigned to unit transferred out:
Cost from beginning WIP Inventory $1,267 $980 $287
Current cost added to complete beginning WIP:
Material (200*$3.05) $610 $610
Conversion (220 * $2.10) $462 $462
Total Cost from beginning inventory $2,339 $1,590 $749
Current cost of unit started and completed:
Material (3100*$3.05) $9,455 $9,455
Conversion (3100*2.10) $6,510 $6,510
Total cost of unit started and completed $15,965 $9,455 $6,510
Total cost of unit transferred out $18,304 $11,045 $7,259
Cost assigned to ending WIP:
Material (400*$3.05) $1,220 $1,220
Conversion (150*$2.10) $315 $315
Total ending WIP inventory $1,535 $1,220 $315
Total cost accounted for $19,839 $12,265 $7,574

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