FIFO Method, Equivalent Units, Unit Cost, Multiple Departments Fordman Company h
ID: 2420520 • Letter: F
Question
FIFO Method, Equivalent Units, Unit Cost, Multiple Departments
Fordman Company has a product that passes through two processes: Grinding and Polishing. During December, the Grinding Department transferred 20,000 units to the Polishing Department. The cost of the units transferred into the second department was $40,000. Direct materials are added uniformly in the second process. Units are measured the same way in both departments.
The second department (Polishing) had the following physical flow schedule for December:
Costs in beginning work in process for the Polishing Department were direct materials, $5,000; conversion costs, $6,000; and transferred in, $8,000. Costs added during the month: direct materials, $32,000; conversion costs, $50,000; and transferred in, $40,000.
Assume the company uses the FIFO method.
Required:
1-a. Prepare a schedule of equivalent units. Enter percentages as whole numbers.
Fordman Company
Schedule of Equivalent Units
For the month of December
Direct Materials
Conversion Costs
Transferred In
Units to complete in BWIP:
Units in EWIP:
1-b.Compute the unit cost for the month of December. Round intermediate calculations and your final answer to the nearest cent.
$ per equivalent unit
1-a. Prepare a schedule of equivalent units. Enter percentages as whole numbers.
Fordman Company
Schedule of Equivalent Units
For the month of December
Direct Materials
Conversion Costs
Transferred In
Units to complete in BWIP:
x
%
Units in EWIP:
x
%
x
%
Explanation / Answer
Polishing Department Equivalent Units $ Flow Of Units Physical Units Direct Material Conversion Cost Transferred In Cost Units to be accounted for Beginning work in process inventory 4000 Units started this period 20000 Total u nits to be accounted for 24000 Units accounnted for: Completed and transferred out (b) 16000 16000 16000 16000 Ending work in progress inventory (c) 8000 2000 2000 500 Total units to be accounted for (f) 24000 18000 18000 16500 Flow of Cost Cost in the begnning work in progress inventory 19000 5000 6000 8000 Cost incurred 122000 32000 50000 40000 Total Cost to be accounted for (e) 141000 37000 56000 48000 Cost per equivalent unit (a)- (e/f) 8.08 2.06 3.11 2.91 Cost accounted for Cost assigned to units transferred out (a*b) 129212 32888.89 49777.78 46545.45 Cost in ending work in progress inventory (a*c) 11788 4111.11 6222.22 1454.55 Total Cost accounted for 141000.00 37000.00 56000.00 48000.00
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