In: Accounting
ANSWER ALL PARTS. DO NOT SKIP ANY PART. ATTEMPT ONLY IF YOU CAN EXPLAIN EACH PART STEP BY STEP
Jarvene Corporation uses the FIFO method in its process costing
system. The following data are for the most recent month of
operations in one of the company’s processing departments:
Units in beginning inventory 390
Units started into production 4,290
Units in ending inventory 340
Units transferred to the next department 4,340
Materials Conversion
Percentage completion of beginning inventory 80 % 20 %
Percentage completion of ending inventory 70 % 30 %
The cost of beginning inventory according to the company’s costing
system was $7,833 of which $4,865 was for materials and the
remainder was for conversion cost. The costs added during the month
amounted to $177,160. The costs per equivalent unit for the month
were:
Materials Conversion
Cost per equivalent unit $18.00 $23.00
Required:
1. Compute the total cost per equivalent unit for the month.
2. Compute the equivalent units of material and conversion in the
ending inventory.
3. Compute the equivalent units of material and conversion that
were required to complete the beginning inventory.
4. Compute the number of units started and completed during the
month.
5. Compute the cost of ending work in process inventory for
materials, conversion, and in total for the month.
6. Compute the cost of the units transferred to the next department
for materials, conversion, and in total for the month.
1. Total cost per equivalent unit = Cost per equivalent unit for materials + Cost per equivalent unit for conversion = $18 + $23 = $41
2. Equivalent units of material and conversion in ending inventory
Materials: 340 x 70% = 238
Conversion: 340 x 30% = 102
3. Equivalent units of material and conversion required to complete beginning inventory
Materials: 390 x 20% = 78
Conversion: 390 x 80% = 312
4. Number of units started and completed = Number of units transferred to the next department - Number of units in beginning inventory = 4340 - 390 = 3950
5. Cost of ending work in process inventory
Materials: 238 x $18 = $4284
Conversion: 102 x $23 = $2346
Total: $4284 + $2346 = $6630
6. Cost of units transferred to the next department
Materials | Conversion | Total | |
Cost of beginning work in process | 4865 | 2968 | 7833 |
Cost incurred on beginning work in process | 1404 | 7176 | 8580 |
(78 x $18) | (312 x $23) | ||
Cost of units started and completed | 71100 | 90850 | 161950 |
(3950 x $18) | (3950 x $23) | ||
Total cost of units transferred out | 77369 | 100994 | 178363 |