Question

Richards Corporation uses the FIFO method of process costing. The following information is available for October in its Fabricating Department:

Units:
Beginning Inventory: 93,000 units, 70% complete as to materials and 20% complete as to conversion.
Units started and completed: 263,000.
Units completed and transferred out: 356,000.
Ending Inventory: 36,500 units, 40% complete as to materials and 15% complete as to conversion.

Costs:
Costs in beginning Work in Process - Direct Materials: $50,200.
Costs in beginning Work in Process - Conversion: $92,700.
Costs incurred in October - Direct Materials: $772,280.
Costs incurred in October - Conversion: $1,161,810.

Answer 1

Solution:

Richards Corporation
Fabricating Department
Computation of Equivalent unit (FIFO)
Particulars	Physical units	Material	Conversion
Units to be accounted for:
Beginning WIP Inventory	93000
Units started this period	299500
Total unit to be accounted for	392500
Units Accounted for:
Units completed and transferred out
From beginning inventory Material - 30% Conversion - 80%	93000	27900	74400
Started and completed currently	263000	263000	263000
Units in ending WIP Material - 40% Conversion - 15%	36500	14600	5475
Total units accounted for	392500	305500	342875

Richards Corporation
Fabricating Department
Computation of Cost per Equivalent unit
Particulars	Total cost	Material	Conversion
Current period cost	$1,934,090.00	$772,280.00	$1,161,810.00
Equivalent units		305500	342875
Cost per equivalent unit		$2.53	$3.39

Richards Corporation
Fabricating Department
Producton cost report - FIFO
Particulars	Total cost	Material	Conversion
Cost Accounted for :
Cost assigned to unit transferred out:
Cost from beginning WIP Inventory	$142,900	$50,200	$92,700
Current cost added to complete beginning WIP:
Material (27900*$2.53)	$70,529	$70,529
Conversion (74400*$3.39)	$252,100		$252,100
Total Cost from beginning inventory	$465,529	$120,729	$344,800
Current cost of unit started and completed:
Material (263000*$2.53)	$664,843	$664,843
Conversion (263000*$3.39)	$891,159		$891,159
Total cost of unit started and completed	$1,556,002	$664,843	$891,159
Total cost of unit transferred out	$2,021,531	$785,572	$1,235,958
Cost assigned to ending WIP:
Material (14600*$2.53)	$36,908	$36,908
Conversion (5475*$3.39)	$18,552		$18,552
Total ending WIP inventory	55,459	36,908	18,552
Total cost accounted for	$2,076,990	$822,480	$1,254,510