Question
In: Accounting
In October, Manchaca Company, who uses the FIFO method for process costing, had the following production...
In October, Manchaca Company, who uses the FIFO method for
process costing, had the following production and cost
data:
| Beginning inventory units* | 42,600 |
| October completed production | 1,570,000 |
| Units in ending inventory** | 28,400 |
| Beginning inventory cost | $458,482 |
| October direct material cost per EUP | $10.74 |
| October direct labor cost per EUP | $13.88 |
| October overhead cost per EUP | $24.80 |
* 80% complete as to DM; 45% complete as to DL; 30% complete as
to OH
** 35% complete as to DM; 15% complete as to DL; 25% complete as to
OH
Note: When answering the following questions,
round your answers to two decimal places (i.e. round $4.355 to
$4.36).
a. What is the cost of the beginning inventory transferred out in October?
b. What is the total cost transferred out in
October?
c. What is the cost of ending inventory at the end of
October?
d. What is the total cost to account for during
October?
Solutions
Expert Solution
Solution:
| Equivalent units of production (EUP) - Weighted Average method | |||||||
| Units | %Material | EUP-Material | % direct labor | EUP-Direct labor | % Overhead | EUP- Overhead | |
| units of Beginning work in process | 42600 | 20% | 8520 | 55% | 23430 | 70% | 29820 |
| Units started and completed (1570000-42600) | 1527400 | 100% | 1527400 | 100% | 1527400 | 100% | 1527400 |
| units of Ending work in process | 28400 | 35% | 9940 | 15% | 4260 | 25% | 7100 |
1.
| Cost of the beginning inventory transferred out: | Costs | |||
| beginning inventory Costs | $4,58,482 | |||
| Costs to complete Beginning Inventory: | EUP | Cost per EUP | Total | |
| Materials | 8520 | $10.74 | $91,504.80 | |
| Direct Labor | 23430 | $13.88 | $3,25,208.40 | |
| Overhead | 29820 | $24.80 | $7,39,536.00 | |
| Total costs to complete beginning inventory | $11,56,249.20 | |||
| Cost of the beginning inventory transferred out | 16,14,731.20 |
2.
| Total cost transferred out in October: | Costs | |||
| Cost of the beginning inventory transferred out | $16,14,731.20 | |||
| Costs to Units started and completed: | EUP | Cost per EUP | Total | |
| Materials | 1527400 | $10.74 | $1,64,04,276.00 | |
| Direct Labor | 1527400 | $13.88 | $2,12,00,312.00 | |
| Overhead | 1527400 | $24.80 | $3,78,79,520.00 | |
| Total costs of units started and completed | $7,54,84,108.00 | |||
| Total cost transferred out in October | 7,70,98,839.20 |
3.
| Cost of ending inventory at the end of October | EUP | Cost per EUP | Total |
| Materials | 9940 | $10.74 | $1,06,755.60 |
| Direct Labor | 4260 | $13.88 | $59,128.80 |
| Overhead | 7100 | $24.80 | $1,76,080.00 |
| Cost of ending inventory at the end of October | $3,41,964.40 |
4.
| Total cost to account for during October: | |
| Total cost transferred out in October | 7,70,98,839.20 |
| Cost of ending inventory at the end of October | $3,41,964.40 |
| Total cost to account for during October | 7,74,40,803.60 |
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