The Matsui Lubricants plant uses the FIFO method to account for its work-in-proc
ID: 2465426 • Letter: T
Question
The Matsui Lubricants plant uses the FIFO method to account for its work-in-process inventories. The accounting records show the following information for a particular day:
Beginning WIP inventory
Direct materials $ 1,900
Conversion costs 700
Current period costs
Direct materials 26,364
Conversion costs 13,121
Quantity information is obtained from the manufacturing records and includes the following:
Beginning inventory 560 units (50% complete as to materials, 60% complete as to conversion)
Current period units started 3,700 units
Ending inventory 1,000 units (40% complete as to materials, 20% complete as to conversion)
Required: Compute the cost of goods transferred out and the ending inventory using the FIFO method. (Do not round your intermediate calculations. Round your final answers to nearest whole dollar value.)
Explanation / Answer
quantity schedule
As at beg
560
Transferred out from units from beg
560
Units both started and completed during the current period
(3700-1000)
2,700
Units transferred out (560+3700-1000)
3,260
As at end
1,000
calculation of equivalent units
Direct
Conversion
Materials
Costs
Units in beginning WIP (A)
560
560
% of completion of beginning WIP in previous period (B)
50%
60%
% of beginning WIP completed this period [C=100%-B]
50%
40%
Equivalent units in beginning WIP [D=A×C]
280
224
Units both started and completed in current period (E)
2,700
2,700
Units of ending WIP (F)
1,000
1,000
Percentage of completion of ending WIP (G)
40%
20%
Equivalent units in ending WIP (H=F×G)
400
200
Total equivalent units (D+E+H)
3,380
3,124
cost per equivalent unit.
Direct
Conversion
Total
Materials
Costs
COST (i)
26364
13121
39485
Total equivalent units (J)
3,380
3,124
Cost per equivalent unit (I/J)
7.80
4.20
12.00
Cost of beginning WIP brought forward from last period (K)
2,600
Direct materials 280*7.8 (L)
2,184
Conversion costs 224*4.20 (M)
941
Cost incurred on beginning WIP in current period (N=L+M)
3,125
Beginning WIP (O=K+N)
5,725
Cost of units started and completed in current period (12*2700 ) (P)
32,400
Cost of units transferred out (O+P)
38,125
cost of ending WIP
Direct materials 280*7.8 (Q)
3,120
Conversion costs 224*4.20 (R)
840
total cost of WIP (Q+R)
42,085
quantity schedule
As at beg
560
Transferred out from units from beg
560
Units both started and completed during the current period
(3700-1000)
2,700
Units transferred out (560+3700-1000)
3,260
As at end
1,000
calculation of equivalent units
Direct
Conversion
Materials
Costs
Units in beginning WIP (A)
560
560
% of completion of beginning WIP in previous period (B)
50%
60%
% of beginning WIP completed this period [C=100%-B]
50%
40%
Equivalent units in beginning WIP [D=A×C]
280
224
Units both started and completed in current period (E)
2,700
2,700
Units of ending WIP (F)
1,000
1,000
Percentage of completion of ending WIP (G)
40%
20%
Equivalent units in ending WIP (H=F×G)
400
200
Total equivalent units (D+E+H)
3,380
3,124
cost per equivalent unit.
Direct
Conversion
Total
Materials
Costs
COST (i)
26364
13121
39485
Total equivalent units (J)
3,380
3,124
Cost per equivalent unit (I/J)
7.80
4.20
12.00
Cost of beginning WIP brought forward from last period (K)
2,600
Direct materials 280*7.8 (L)
2,184
Conversion costs 224*4.20 (M)
941
Cost incurred on beginning WIP in current period (N=L+M)
3,125
Beginning WIP (O=K+N)
5,725
Cost of units started and completed in current period (12*2700 ) (P)
32,400
Cost of units transferred out (O+P)
38,125
cost of ending WIP
Direct materials 280*7.8 (Q)
3,120
Conversion costs 224*4.20 (R)
840
total cost of WIP (Q+R)
42,085
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