Question

Complete the following problem by preparing a Product Cost Report reflecting all five steps under the separate assumptions for each problem:

Mike’s Brushes Inc. manufactures electric toothbrushes. The brushes are manufactured in 2 sequential processes: Interior and Assembly. The electronics are manufactured in-house in the Interior Department and the casing and bristles are purchased from an outside manufacturer and are added in the Assembly Department.

Information related the Interior Department for the month of March can be summarized as follows:

Interior Department:

Beginning Units: 1,300 – 70% completed

Ending Units: 1,000 – 30% completed

New Units started this month: 3,000

Direct Materials costs in beginning WIP: $310

Conversion costs in beginning WIP: $705

Direct Materials costs incurred this month: $2,100

Conversion costs incurred this month: $4,035

In the Interior Department, direct materials are added at the beginning of the process while conversion costs are added uniformly throughout the assembly process.

Assuming Ben’s Brushes uses the FIFO method for process costing, prepare a Product Cost Report reflecting all five steps of the process (Round per unit costs to the nearest cent). Show your computations.

Answer 1

FIFO method
Beggining units	1300	Transferred out	3,300
Started into production	3000	Ending units	1,000
	4300		4300
Equivalent units	Material	Conversion
Beginning units	1300	1300
Completion in current period	0%	30%
A	0	390
Units started and completed	2000	2000
Completion	100%	100%
B	2000	2000
Ending Units	1,000	1,000
Completion	100%	30%
C	1000	300
Total units A+B+C	3000	2690
Cost per equivalent units
Per unit cost	Cost	Total units	Per unit cost
Material cost	2100	3000	0.70
Conversion cost	4035	2690	1.50
	6135		2.20

Cost of goods sold	Material	convertion cost
Beginning inventory completed
Completion	0%	30%
Per unit cost	0.70	1.50
Units	1300	1300
Total cost   A	0.00	585	585
Units started and completed
Completion	100%	100%
Per unit cost	0.70	1.50
Units	2000	2000
Total cost    B	1400	3000	4400
Beginning work in progress C	310	705	1015
Total cost A+B+C			6000
Ending work in progress
Completion	100%	30%
Per unit cost	0.70	1.50
Units	1,000	1,000
Total cost	700	450	1150
	Total cost accounted for		7150