Question

Tomlinson Company has the following production data for May:

• ·  Beginning Work in Process, 0 units
• ·  Units started, 94,000
• ·  Ending Work in Process, 17,000 units that are 100% complete for materials and 50% complete for conversion costs
• ·  Unit materials cost, $6
• ·  Unit conversion cost, $12
• ·  Total costs to be assigned, $618,000
  

Tomlinson uses the FIFO method to calculate equivalent units. Determine the costs to be assigned to the units transferred out and the units in ending Work in Process.

Answer 1

Solution

Completed and transferred out production	$ 1,386,000
Inventory in process	$ 204,000

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed	% completed this period
	Material	Conversion	Material	Conversion
Beginning WIP	-	0%	0%	N/A	N/A
Units introduced	94,000
Total units to be accounted for	94,000
Completed and Transferred unit	77,000	0%	0%	100%	100%
Ending WIP	17,000	0%	0%	100%	50%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material	Conversion
Units Transferred:	% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	-	100%	-	100%	-
From units started/Introduced	77,000	100%	77,000	100%	77,000
Total	77,000		77,000		77,000
	Total Units	Material	Conversion
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	17,000	100%	17,000	50%	8,500
Total EUP	94,000		94,000		85,500

.

Cost report [Including Reconciliation]
	Cost of	Units Transferred	77,000.00	units
		Equivalent Units [Step 2]	Cost per Equivalent Units [Step 3]	Cost of Units Transferred	TOTAL
A	From Beginning WIP:
	Material	-	$ 6.00	$ 0
	Conversion	-	$ 12.00	$ 0	$ 0
B	From units started & completed
	Material	77,000	$ 6.00	$ 462,000
	Conversion	77,000	$ 12.00	$ 924,000	$ 1,386,000
C=A+B	Total				$ 1,386,000
D	Cost of Beginning WIP		$ 0
E=C+D	Total Cost of Units transferred		$ 1,386,000
	Cost of	Ending WIP	17,000.00	units
		Equivalent Units [Step 2]	Cost per Equivalent Units [Step 3]	Cost of Ending WIP	TOTAL
F	Material	17,000	$ 6.00	$ 102,000
G	Conversion	8,500	$ 12.00	$ 102,000
H = F + G	Total Cost of Ending WIP		$ 204,000
I = E + H	Total Cost accounted for	$ 1,590,000
J	Rounding Off Differences	$ 0
K = I + J	Total cost to be accounted for [equals to computed in STEP 3]	$ 1,590,000