Darver Inc. uses the FIFO method in its process costing system. The following da

Question

Darver 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.......................   100

Percent complete with respect to material............... 80%

Percent complete with respect to conversion .......... 60%

Costs in the beginning inventory:

Materials cost.......................       $376

Conversion cost...................      $2376

Units started into production during the month......... 21000

Units completed and transferred out .............    20400

Costs added to production during the month:

Materials cost ................. $93,645

Conversion cost ............ $825,531

Work in process, during

Units in process ............ 700

Percent complete with respect to materials ................ 70%

Percent complete with respect to conversion ............. 50%

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 concersion 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

Details Units % Materials Eq Units Materials % Conversion Eq Units Conversion Opening WIP                  100 80%                 80 60%                   60 Units started              21,000 Output Units completed and transferred            20,400 100%         20,400 100%           20,400 Closing WIP                  700 70%               490 50%                 350 Total              21,100         20,890           20,750 Units Produced in Months by FIFO Remaining part of WIP                  100 20%                 20 40%                   40 Units started & Completed in month            20,300 100%         20,300 100%           20,300 Closing WIP                  700 70%               490 50%                 350 Total Units produced in Month            21,100         20,810           20,690 Total Production cost incurred in month Details Materials Conversion Total Cost incurred in month            93,645           825,531      919,176 Equivalent Units produced in month            20,810              20,690 Cost per equivalent unit in month $            4.50 $            39.90 Cost of Units Transferred Materials Conversion Total Opening WIP cost                  376                2,376           2,752 Equivalent Units started and completed in Month plus remaining part of WIP finishing            20,320              20,340 Cost per equivalent unit in month $            4.50 $            39.90 cost of Equivalent Units started and completed in Month plus remaining part of WIP finishing            91,440           811,566      903,006 Total Cost of units transferred            91,816           813,942      905,758 Cost of Units in closing WIP Materials Conversion Total Equivalent units in WIP                  490                    350 Cost per equivalent unit in month $            4.50 $            39.90 Total cost of closing WIP $          2,205 $         13,965 $    16,170

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