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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