Calculate Equivalent Units, Unit Costs, and Transferred Costs—FIFO Method Godfre

Question

Calculate Equivalent Units, Unit Costs, and Transferred Costs—FIFO Method Godfrey

Manufacturing, Inc., operates a plant that produces its own regionally marketed Spicy Steak Sauce.

The sauce is produced in two processes, blending and bottling. In the Blending Department, all ma-

terials are added at the start of the process, and labor and overhead are incurred evenly throughout

the process. Godfrey uses the FIFO method. The following data from the Work in Process—Blending

Department account for January 2016 is missing a few items:

Work in Process —Blending Department

January 1 inventory (5,000 gallons, 60% processed) $17,900

Transferred to Bottling Department (60,000 gallons) .................................

January charges:

Direct material (61,000 gallons) ................................................. 152,500

Direct labor................................................................. 73,600

Manufacturing overhead ...................................................... 48,800

January 31 inventory (

gallons, 70% processed) ...........................

Required

Assuming Godfrey uses the FIFO method in process costing, calculate the following amounts for the

Blending Department:

a. Number of units in the January 31 inventory.

b. Equivalent units for materials and conversion costs.

c. January cost per equivalent unit for materials and conversion costs.

d. Cost of the units transferred to the Bottling Department.

e. Cost of the incomplete units in the January 31 inventory

Explanation / Answer

UNITS TO ACCOUNT FOR: Beginning Work in Process units 5,000 Add: Units Started in Process 61,000 Total Units to account for: 66,000 UNITS TO BE ACCOUNTED FOR: Units completed from Beginning WIP 5000 Units started and completed 55,000 Ending Work in Process 6,000 Total Units to be accounted for: 66,000 Equivalent Units: Material Cost Conversion % Completion Units % Completion Units Units completed from Beg. WIP 0% 0 40% 2,000 Units started and completed 100% 55,000 100% 55,000 Ending Work in Process 100% 6,000 70% 4,200 Total Equivalent units 61,000 61,200 COST PER EQUIVALENT UNIT: Material Conversion Total cost added during the year 152,500 122,400 Equivalent Units 61,000 61,200 Cost per Equivalent unit 2.5 2 TOTAL COST ACCOUNTED FOR: Units Completed from Beginning WIP (5000 units) Equivalent unit Cost per EU Total Cost Beginning Cost 17900 Material 0 2.5 0 Conversion Cost 2,000 2 4000 Cost of units completed from Beg WIP 21900 Units started and Transferred out (55000 units) Equivalent unit Cost per EU Total Cost Material 55,000 2.5 137500 Conversion Cost 55,000 2 110000 Total Cost of Units completed and transferred out: 247500 Ending Work in process (6,000 units) Equivalent unit Cost per EU Total Cost Material 6,000 2.5 15000 Conversison Cost 4,200 2 8400 Total cost of Ending Work in process: 23,400 Req a: Number of units in Jan 31 inventorry: 6000 units Req b: Eq. Units Material 61000 Conversion 61200 Req c: Cost pre Eq. units Material 2.5 Conversion 2 Rreq d; Cost of units transferred to Bottling (21900+247500): 269400 Req e: Cost of Incomplete Inventory on Jan31: $ 23400

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