Pan 2018 Process Costing-FIFO Assumptions The Stones Company had unfinished unit

Question

Pan 2018 Process Costing-FIFO Assumptions 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: Department A Beginning of th End of Mon Beginning units Percentage completion: 24,000 20,000 Direct material Direct labor and overhead 100% 75% 100% 60% Beginning Costs 188,000 Inputs for Month - Department A Units introduced Cost introduced: 60,000 Direct material Direct labor and overhead $ 315,000 $ 261,000 Department IB Beginning of Month End of Month 8,000 10,000 Beginning units Percentage completion: Direct material Direct labor/ overhead 100% 25% 100% 30% $92,000 Beginning costs Inputs for Month-Department B Units introduced Cost introduced: Transferred-in Direct material Direct labor & overhead S 83,200 S 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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