Question

The Matsui Lubricants plant uses the FIFO method to account for its work-in-process inventories. The accounting records show the following information for a particular day: Beginning WIP inventory Direct materials $ 951 Conversion costs 452 Current period costs Direct materials 14,690 Conversion costs 11,928 Quantity information is obtained from the manufacturing records and includes the following: Beginning inventory 400 units (60% complete as to materials, 55% complete as to conversion) Current period units started 5,200 units Ending inventory 1,400 units (40% complete as to materials, 20% complete as to conversion)

(1) Compute the equivalent units for the materials and conversion cost calculations.

(2) Compute the cost per equivalent unit for direct materials and for conversion costs using the FIFO method. (Round your answers to 2 decimal places.)

(3)Compute the cost of goods transferred out and the ending inventory using the FIFO method. (Do not round intermediate calculations.)

Answer 1

1) Computation of equivalent unit
Particulars			unit	%	material	%	conversion
beginning WIP			400	40%	160	45%	180
completed (400+5200-1400)-400			3800	100%	3800	100%	3800
ending WIP			1400	40%	560	20%	280
Equivalent unit of production			5600		4520		4260
2)     Cost per equivalent unit
Particulars			Direct material	conversion	total
cost during the month (1)			14690	11928	26618
equivalent unit (2)			4520	4260
cost per EUP (1)/2			3.25	2.8	6.05
3) Cost reconciliation schedule
Particulars			amount
cost at beginning(951+452)			1403
cost during the year(14690+11928)			26618
cost to be accounted for			28021
tranferred to finished goods
Cost of beginning WIP			1403
COST Incurred (160*3.25),(180*2.8)			1024
total cost at beginning WIP			2427
stared & completed (4200*6.05)			25410
cost of unit transferred out				27837
cost of Ending WIP
material (560*3.25)			1820
conversion (280*2.8)			784
total cost of WIP ending				2604
total cost				30441