Question

Problem 16-7AA FIFO: Process cost summary, equivalent units, cost estimates LO C2, C3, C4, P4

[The following information applies to the questions displayed below.]

Dengo Co. makes a trail mix in two departments: roasting and blending. Direct materials are added at the beginning of each process, and conversion costs are added evenly throughout each process. The company uses the FIFO method of process costing. During October, the roasting department completed and transferred 23,000 units to the blending department. Of the units completed, 3,400 were from beginning inventory and the remaining 19,600 were started and completed during the month. Beginning work in process was 100% complete with respect to direct materials and 40% complete with respect to conversion. The company has 2,800 units (100% complete with respect to direct materials and 80% complete with respect to conversion) in process at month-end. Information on the roasting department’s costs of beginning work in process inventory and costs added during the month follows.

Cost	Direct Materials			Conversion
Of beginning work in process inventory	$	10,300		$	111,690
Added during the month		266,560			1,117,584

Problem 16-7A Part 2

2. Prepare the journal entry dated October 31 to transfer the cost of completed units to the blending department. (Do not round your intermediate calculations.)

Answer 1

Solution 2:

Meetha Corporation
Roasting Department
Computation of Equivalent unit (FIFO)
Particulars	Physical units	Material	Conversion
Units to be accounted for:
Beginning WIP Inventory	3400
Units started this period (23000 + 2800 - 3400)	22400
Total unit to be accounted for	25800
Units Accounted for:
Units completed and transferred out
From beginning inventory Material - 0% Conversion - 60%	3400	0	2040
Started and completed currently	19600	19600	19600
Units in ending WIP Material - 100% Conversion - 80%	2800	2800	2240
Total units accounted for	25800	22400	23880

Meetha Corporation
Roasting Department
Computation of Cost per Equivalent unit
Particulars	Total cost	Material	Conversion
Current period cost	$1,384,144.00	$266,560.00	$1,117,584.00
Equivalent units		22400	23880
Cost per equivalent unit		$11.90	$46.80

Meetha Corporation
Roasting Department
Producton cost report - FIFO
Particulars	Total cost	Material	Conversion
Cost Accounted for :
Cost assigned to unit transferred out:
Cost from beginning WIP Inventory	$121,990	$10,300	$111,690
Current cost added to complete beginning WIP:
Material	$0	$0
Conversion (2040 * $46.80)	$95,472		$95,472
Total Cost from beginning inventory	$217,462	$10,300	$207,162
Current cost of unit started and completed:
Material (19600*$11.90)	$233,240	$233,240
Conversion (19600*$46.80)	$917,280		$917,280
Total cost of unit started and completed	$1,150,520	$233,240	$917,280
Total cost of unit transferred out	$1,367,982	$243,540	$1,124,442
Cost assigned to ending WIP:
Material (2800*$11.90)	$33,320	$33,320
Conversion (2240*$46.80)	$104,832		$104,832
Total ending WIP inventory	138,152	33,320	104,832
Total cost accounted for	$1,506,134	$276,860	$1,229,274

Meetha Corporation
Journal Entries
Particulars	Debit	Credit
Work In Process - Blending Department Dr	$1,367,982.00
To Work In Process - Roasting Department		$1,367,982.00
(Being cost of goods transferred from Roasting department to Blending department)