Question

E Corporation uses FIFO to calculate inventory values and has calculated the following data:

	Direct Materials	Conversion Costs
Cost Information:
Associared with Beginning WIP (From Prior Period)	$43,708	$35,550
Incurred in the Current Period	$112,000	$88,200
Equivalent Units:
Completing Beginning WIP	1,200	3,600
Started and Completed	26,000	26,000
Starting Ending WIP	1,200	1,00

a) What is cost completed and transferred out for Direct Materials?

b) What is cost completed and transferred out for Conversions Costs?

Answer 1

	Direct materials	Conversion costs
Equivalent units :
Completing beginning WIP	1200	3600
Started and completed	26000	26000
Starting ending WIP	1200	1000
Total equivalent units	28400	30600

	Direct materials	Conversion costs
Cost incurred in the current period	112000	88200
(/) Total equivalent units	28400	30600
Cost per equivalent units	3.944	2.882

	Direct materials	Conversion cost
Cost associated with beginning WIP (from prior period)		43708		35550
Cost of Beginning WIP Completed during current period :
Completing beginning WIP equivalent units	1200		3600
(*) Cost per equivalent unit	3.944	4733	2.882	10375
Cost of units started and completed during the period :
Units started and completed during the period	26000		26000
(*) Cost per equivalent unit	3.944	102544	2.882	74932
Cost completed and transferred out		150985		120857

(a) Cost completed and transferred out for Direct materials	150985
(b) Cost completed and transferred out for Conversion cost	120857