Easy Inc. uses the FIFO method in its process costing system. The following data

Question

Easy Inc. uses the FIFO method in its process costing system. The following data concern the operations of the company’s first processing department for a recent month. Work in process, beginning: Units in process 1,250 Percent complete with respect to materials 90 % Percent complete with respect to conversion 10 % Costs in the beginning inventory: Materials cost $ 1,886 Conversion cost $ 1,478 Units started into production during the month 24,300 Units completed and transferred out 24,400 Costs added to production during the month: Materials cost $ 71,671 Conversion cost $ 543,298 Work in process, ending: Units in process 1,150 Percent complete with respect to materials 70 % Percent complete with respect to conversion 70 % Required: Using the FIFO method: a. Determine the equivalent units of production for materials and conversion costs. b. Determine the cost per equivalent unit for materials and conversion costs. c. Determine the cost of ending work in process inventory. d. Determine the cost of units transferred out of the department during the month.

Explanation / Answer

Product Cost Report as per FIFO Method Statement of equivalent production(FIFO) Materials Conversion Costs Particulars Input Particulars Output     % Equivalent Units     % Equivalent Units Beginning WIP 1250 Addition 24300 Opening WIP 1250 10 125 90 1125 Completed & transferred 23150 100 23150 100 23150 Total transfer 24400 23275 24275 Ending WIP 1150 70 805 70 805 25550 Total 25550 24080 25080 Cost element Total costs Equivalent units Cost per Equivalent units Material 71671 24080 2.976 Conversion costs 543298 25080 21.663 Total 614969 Completed/Transferred Units Costs Total costs Direct Materials 23275 2.976 69275.02 Conversion Costs 24275 21.663 525859.61 Cost of goods Manufactured 595135 Add : cost of beginning Work in process Inventory Materials 90% complete 1125 1.676 1886 Conversion Costs 10% complete 125 11.824 1478 Total cost of transferred units 598499 Ending Inventory Units Costs Total costs Direct Materials 805 2.976 2395.98 Conversion Costs 805 21.663 17438.39 Cost of ending Inventory 19834 Total Cost allocated 614969

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