FIF A. Required: Complete the following sequence of steps for Department A. The

Question

FIF A. Required: Complete the following sequence of steps for Department A. The Stones Company had unfinished units in both of its manufacturing operations. Production and cost data for the prior month for both Departments is provided below: Compute physical flow and equivalent full units Department A Beginning of Month 24,000 1 00 End of Month Beginning units 20,000 ercentage completion 2. Compute unit costs. Direct material Direct Inbor and overhead 100% 60% 75% Beginning Costs $188,000 Inputs for Month Units introduced Cost introducod: Department A 3. Deternine ending work-in-process for Department A 60,000 Direct material Direct labce and overhead 315,00 S261,000 4. Prepare the journal entry to transfer costs to Department B Department B Beginning of Month End of Month Beginning units 8,000 10,000 Percentage complction: Direct material Direct labor overhead 100% 25% 100% 30% Beginning costs $ 92,000 Inputs for Month-Department B Work-In-Process-Dept.A Beg. WIP 188,000 DM.35,000 (?) DL & OH.. 261,000transfemed out Work in Pro Units introduced Beg WIP 92,000 TI DM Di &OH 214,200 Cost introduced: 83,2 Transferred-in Direct material Direct labor & overhead $ 83,200 End. WIP . End WIP.) $214,200

Explanation / Answer

Question - 1

Physical flow = Beginning Inventory + Introduced - Ending Inventory = 24000 + 60000 - 20000

= 64000 Units

Equivalent Units for ( Materials ) = Beginning Inventory * ( Balance % ) + Started and finished * ( 100 %) + Ending Inventory * ( given % )

= 24000 * ( 0%) + 40000 * ( 100 % ) + 20000 * ( 100% ) = 0 + 40000 + 20000 = 60000 Units

Equivalent Units for ( conversion ) = 24000 * ( 25%) + 40000 * ( 100 % ) + 20000 * ( 60% )

= 6000 + 40000 + 12000 = 58000 Units

Note :

Under FIFO method ....... 64000 Units transfered out comparises of 24000 units of beginning WIP and balance 40000 Units that are started and finished.

Question - 2 ............ Unit costs

Material Unit cost = 315000 / 60000 = 5.25 per Unit

Conversion cost = 261000 / 58000 = 4.50 per Unit

Question - 3

Ending WIP for Department - A

Material + Conversion cost = 20000 Units * 5.25 per Unit + 12000 Units * 4.5 per Unit = 159000

Question - 4

= Cost of Beginning WIP + Completion cost of WIP + cost of Units started and finished in the month

= 188,000 + ( 0 + 6000 * 4.5 ) + 40000 * ( 5.25 + 4.5 ) = 188,000 + 27000 + 390000 = 605000

Question - 5

Debit Credit Work in process - Dept B ( Transfered In) 605,000 Work in process - Dept A ( Transfered Out) 605,000

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