Question

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 $ 985

Conversion costs 572

Current period costs Direct materials 27,275

Conversion costs 18,722

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

Beginning inventory 850 units (70% complete as to materials, 60% complete as to conversion)

Current period units started 6,000 units Ending inventory 1,600 units (50% complete as to materials, 20% complete as to conversion)

information Required:

(1) Compute the equivalent units for the materials and conversion cost calculations.

a. equivalent units for materials = ?

b. equivalent units for conversion costs = ?

(2) Compute the cost per equivalent unit for direct materials and for conversion costs using the FIFO method. (Round your answers to 2 decimal places.)

a. Direct Materials (cost per equivalent unit) = ?

b. Conversion costs (cost per equivalent unit) = ?

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

a. cost of goods transferred out = ?

b. Cost of ending inventory = ?

Answer 1

a)	Equivalent Units of Material	5455
	Equivalent units for conversion costs	5060
b)	Cost per equivalnet unit
	Materials	5.00
	Convesrion Costs	3.70
c)	Costs of Goods Transferred Out=	40,813
	Costs in Ending Inventory=	5,184
	The Matsui Lubricants
	Production Cost Report (FIFO)
		Actual Units
	Calculation of Physical UNITS:
	Units in beginning inventory	850
	Units started during the period	6000
	Units to be accounted for	6850
		Actual Units	Equivalent Units
			Material	CC
	Units Completed and Transferred	5250
	From units in beginning inventory	850	255	340
	From units started	4400	4400	4400
	Units in ending inventory	1600	800	320
	Equivalent Unit of production	6850	5455	5060
	Costs:
		Total	Material	CC
	Costs in beginning inventory	0	0	0
	Cost added during the year	45997	27275	18722
	Total cost to account for	45997	27275	18722
	Equivalent Units from above		5455	5060
	Cost per equivalent unit	8.70	5.00	3.70
		Total	Material	CC
	Cost Accounted for
	Units completed and transfer	0	0	0
	From units in beginning inventory	2,533	1,275	1,258
	From units started	38,280	22,000	16,280
	Total Cost of units transferred out	40,813	23,275	17,538
	Units in ending inventory	5,184	4,000	1,184
	Total Cost Accounted for	45,997	27,275	18,722