Question

Calculate Equivalent Units, Unit Costs, and Transferred Costs—FIFO Method Godfrey

Manufacturing, Inc., operates a plant that produces its own regionally marketed Spicy Steak Sauce.

The sauce is produced in two processes, blending and bottling. In the Blending Department, all ma-

terials are added at the start of the process, and labor and overhead are incurred evenly throughout

the process. Godfrey uses the FIFO method. The following data from the Work in Process—Blending

Department account for January 2016 is missing a few items:

Work in Process —Blending Department

January 1 inventory (5,000 gallons, 60% processed) $17,900

Transferred to Bottling Department (60,000 gallons) .................................

January charges:

Direct material (61,000 gallons) ................................................. 152,500

Direct labor................................................................. 73,600

Manufacturing overhead ...................................................... 48,800

January 31 inventory (

gallons, 70% processed) ...........................

Required

Assuming Godfrey uses the FIFO method in process costing, calculate the following amounts for the

Blending Department:

a. Number of units in the January 31 inventory.

b. Equivalent units for materials and conversion costs.

c. January cost per equivalent unit for materials and conversion costs.

d. Cost of the units transferred to the Bottling Department.

e. Cost of the incomplete units in the January 31 inventory

Answer 1

UNITS TO ACCOUNT FOR:
Beginning Work in Process units				5,000
Add: Units Started in Process				61,000
Total Units to account for:				66,000
UNITS TO BE ACCOUNTED FOR:
Units completed from Beginning WIP				5000
Units started and completed				55,000
Ending Work in Process				6,000
Total Units to be accounted for:				66,000
Equivalent Units:
			Material Cost		Conversion
			% Completion	Units	% Completion	Units
Units completed from Beg. WIP			0%	0	40%	2,000
Units started and completed			100%	55,000	100%	55,000
Ending Work in Process			100%	6,000	70%	4,200
Total Equivalent units				61,000		61,200
COST PER EQUIVALENT UNIT:
			Material		Conversion
Total cost added during the year			152,500		122,400
Equivalent Units			61,000		61,200
Cost per Equivalent unit			2.5		2
TOTAL COST ACCOUNTED FOR:
Units Completed from Beginning WIP (5000 units)
			Equivalent unit	Cost per EU	Total Cost
Beginning Cost					17900
Material			0	2.5	0
Conversion Cost			2,000	2	4000
Cost of units completed from Beg WIP					21900
Units started and Transferred out (55000 units)
			Equivalent unit	Cost per EU	Total Cost
Material			55,000	2.5	137500
Conversion Cost			55,000	2	110000
Total Cost of Units completed and transferred out:					247500
Ending Work in process (6,000 units)
			Equivalent unit	Cost per EU	Total Cost
Material			6,000	2.5	15000
Conversison Cost			4,200	2	8400
Total cost of Ending Work in process:					23,400
Req a:
Number of units in Jan 31 inventorry: 6000 units
Req b:
		Eq. Units
Material		61000
Conversion		61200
Req c:
		Cost pre Eq. units
Material		2.5
Conversion		2
Rreq d;
Cost of units transferred to Bottling (21900+247500): 269400
Req e: Cost of Incomplete Inventory on Jan31: $ 23400