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Easy Inc. uses the FIFO method in its process costing system. The following data concern the...

Easy Inc. uses the FIFO method in its process costing system. The following data concern the operations of the company’s first processing department for a recent month.

Work in process, beginning:
Units in process 1,400
Percent complete with respect to materials 90 %
Percent complete with respect to conversion 10 %
Costs in the beginning inventory:
Materials cost $ 1,910
Conversion cost $ 1,502
Units started into production during the month 24,600
Units completed and transferred out 24,700
Costs added to production during the month:
Materials cost $ 71,821
Conversion cost $ 543,448
Work in process, ending:
Units in process 1,300
Percent complete with respect to materials 70 %
Percent complete with respect to conversion 70 %

Required:

Using the FIFO method:

a. Determine the equivalent units of production for materials and conversion costs.

b. Determine the cost per equivalent unit for materials and conversion costs.

c. Determine the cost of ending work in process inventory.

d. Determine the cost of units transferred out of the department during the month.

Solutions

Expert Solution

a. Determine the equivalent units of production for materials and conversion costs.

Actual                Material           Conversion
Units % Units % Units
Beginning WIP 1400 10 140 90 1260
Units started and completed 23300 100 23300 100 23300
Ending WIP 1300 70 910 70 910
Equivalent Units 24350 25470

b. Determine the cost per equivalent unit for materials and conversion costs.

Cost (current month only) 71821 543448
Equivalent Units 24350 25470
Cost per Unit of EUP 2.9495 21.3368

c. Determine the cost of ending work in process inventory.

Cost of Ending WIP Inventory EU Cost / EUP Amount
Material 910 2.9495 2684.045
Conversion cost 910 21.3368 19416.488
22101

d. Determine the cost of units transferred out of the department during the month.

Cost of Units transferred out
Beginning WIP
Previous cost 3412
Materials 140 2.9495 412.93
Conversion 1260 21.3368 26884.368
Total of Beginning WIP 30709.298
Units started and completed +
Materials 23300 2.9495 68723.35
Conversion 23300 21.3368 497147.44
Cost of units transfered out 596580

ekkarill92 answered 1 year ago
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