Question

FIFO Method, Two-Department Analysis

Muskoge Company uses a process-costing system. The company manufactures a product that is processed in two departments: Molding and Assembly. In the Molding Department, direct materials are added at the beginning of the process; in the Assembly Department, additional direct materials are added at the end of the process. In both departments, conversion costs are incurred uniformly throughout the process. As work is completed, it is transferred out. The following table summarizes the production activity and costs for February:

		Molding		Assembly
Beginning inventories:
Physical units		10,000		8,000
Costs:
Transferred in		—		$45,200
Direct materials		$22,000		—
Conversion costs		$13,800		$16,800
Current production:
Units started		25,000		?
Units transferred out		30,000		35,000
Costs:
Transferred in		—		?
Direct materials		$56,250		$39,550
Conversion costs		$103,500		$136,500
Percentage of completion:
Beginning inventory		40%		50%
Ending inventory		80		50

Compute the following. For interim computations, carry amounts out to four decimal places. Round your final answers to the nearest dollar.

Cost of ending work in process: $__
Cost of goods transferred out: __

A cost reconciliation. When necessary, round equivalent cost per unit to four decimal places, and round all other amounts to the nearest dollar.

Costs to account for:
Beginning work in process	$__
Costs incurred	__
Total costs to account for	$__

Costs accounted for:
Transferred out	$__
Ending work in process	__
Total costs accounted for	$__

Note: Cost reconciliation totals differ by $1 due to rounding error.

Prepare journal entries that show the flow of manufacturing costs for the Assembly Department. (a) Materials are added at the end of the process, (b) conversion costs are recorded, and (c) the units are transferred to Finished Goods.

(a)	Work in Process-Assembly
	Materials Inventory
(b)	Work in Process-Assembly
	Conversion Costs-Control
(c)	Finished Goods
	Work in Process-Assembly

Answer 1

Total costs accounted for:

Cost of units started and completed................................................(27,000 × $11.0133)$297,359*

Cost of units in beginning work in process:..................................................

Prior-period costs62,000..................................

Current cost to finish units:.......................

Direct materials (8,000 × $1.13)9,040....................

Conversion costs (4,000 × $4.20)16,800

Total costs of goods transferred out...................$385,199

Costs in ending work in process:Conversion (1,500 × $4.20)..............................$6,300

Transferred in (3,000 × $5.6833)......................17,050*

Total costs in ending work in process.................23,350

Total costs accounted for.....................................$408,549

*Rounded.

Costs to account for:Beginning work in process...................................$62,000

Costs incurred........

Journal entries:

Work in Process—Assembly..........39,550

Materials Inventory.....................39,550

Conversion Costs—Control......136,500*

Finished Goods................................385,287

Work in Process—Assembly....385,287

*Conversion costs are not broken into direct labor and overheadcomponents