Question

Champion Manufacturing Company uses the FIFO method in its process costing system. The records of Champion Manufacturing Company for the month of May show the following costs in Department A:

Beginning Inventory $ 80,500

Direct Materials 270,000

Direct Labor 357,000

Overhead (150% of Direct Labor Cost) 535,500

Total $1,243,000

The beginning inventory for May consisted of 10,000 units which were 80% complete as to direct materials and 60% complete as to labor and overhead. A total of 100,000 units was completed and transferred out during May, and 20,000 units remained in the work in process inventory. The ending inventory was 80% complete as to direct materials and 40% complete as to labor and overhead.

Required: Using the FIFO method:

(a) Determine the direct materials cost per equivalent unit.

(b) Determine the equivalent units of production for direct labor and overhead.

(c) Determine the cost of the 100,000 units completed and transferred out of the department during the month.

(d) Determine the cost of the 20,000 units work in process inventory at the end of the month.

Answer 1

Cost production report
Flow Of Units	Physical Units	Direct Material A	Conversion cost
Units to be accounted for
Beginning work in process inventory	10000
Units started	110000
Total u nits to be accounted for	120000
Units accounnted for:
Transferred out from units of opening WIP	10000
Units started and completed this period	90000
Completed and transferred out (b)	100000
Ending work in progress inventory©	20000
Total units to be accounted for (f)	120000
Calculation of equivalent units
Units in Beginning WIP n		10000	10000
% of completion of Beginning WIP in last period		80%	60%
% of completion of Beginning WIP completed in current period m		20%	40%
Equivalents units of Beginning Wip A (n*m)		2000	4000
Units started and completed B	90000	90000	90000
Units of Ending WIP	20000	20000	20000
% completion	100%	80%	40%
Equivalent units in ending WIP E	20000	16000	8000
Total Equivalent units A+B+E		108000	102000
Cost per equivalent units
	Direct Material A	Conversion cost	Total
Cost per equivalent units
Cost during the period	$270,000	892500	$1,162,500
Total equivalent units	108000	102000
Cost per equivalent units   d	$2.50	$8.75	$11.25
Cost charged to production
Beginning Work in Process,			80500
Cost incurred during the period			$1,162,500
Total cost accounted			1243000
Cost allocated
Work in Process, Beginning			80500
To complete Inventory in process Beginning (2.5x2000/8.75x4000	$5,000	$35,000	$40,000
Cost of completed Beginning, Wip			$120,500
Started and completed b*d	$225,000	$787,500	$1,012,500
Transferred 0ut			$1,133,000
Work in process Ending c*d	$40,000	$70,000	$110,000
Total cost assigned			1243000
A direct materials cost per equivalent unit	$2.50
B equivalent units of production for direct labor and overhead.	102000
C Cost of units transferred to finished goods during the period.	$1,133,000
D Cost of ending work in process inventory.	$110,000
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