Question

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 1,250 Percent complete with respect to materials 90 % Percent complete with respect to conversion 10 % Costs in the beginning inventory: Materials cost $ 1,886 Conversion cost $ 1,478 Units started into production during the month 24,300 Units completed and transferred out 24,400 Costs added to production during the month: Materials cost $ 71,671 Conversion cost $ 543,298 Work in process, ending: Units in process 1,150 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.

Answer 1

Product Cost Report as per FIFO Method
Statement of equivalent production(FIFO)
						Materials		Conversion Costs
Particulars		Input	Particulars		Output	%	Equivalent Units	%	Equivalent Units
Beginning WIP		1250
Addition		24300	Opening WIP		1250	10	125	90	1125
			Completed & transferred		23150	100	23150	100	23150
			Total transfer		24400		23275		24275
			Ending WIP		1150	70	805	70	805
		25550	Total		25550		24080		25080
Cost element			Total costs	Equivalent units	Cost per Equivalent units
Material			71671	24080	2.976
Conversion costs			543298	25080	21.663
	Total		614969
Completed/Transferred			Units	Costs	Total costs
Direct Materials			23275	2.976	69275.02
Conversion Costs			24275	21.663	525859.61
Cost of goods Manufactured					595135
Add : cost of beginning Work in process Inventory
Materials		90% complete	1125	1.676	1886
Conversion Costs		10% complete	125	11.824	1478
Total cost of transferred units					598499
Ending Inventory			Units	Costs	Total costs
Direct Materials			805	2.976	2395.98
Conversion Costs			805	21.663	17438.39
Cost of ending Inventory					19834
Total Cost allocated					614969