Answer the following questions using the information below: Jane Industries manu

Question

Answer the following questions using the information below: Jane Industries manufactures plastic toys. During October, Jane's Fabrication Department started work on 10,000 models. During the month, the company completed 11,000 models, and transferred them to the Distribution Department. The company ended the month with 1,500 models in ending inventory. There were 2,500 models in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is being followed. Beginning work in process was 25% complete as to conversion costs, while ending work in process was 50% complete as to conversion costs.

Beginning inventory:

Direct materials costs 19200

Conversion costs 10800

Manufacturing costs added during the accounting period:

direct materials costs 70000

conversion costs 240000

What is the cost assigen to ending inventory during October?

Explanation / Answer

Amount of direct mateials cost assigned to ending work-in-process inventory at the end of October = Equivalent Cost per unit of Direct Material * Equivalent unit of Direct Material for ending work-in-process inventory

Amount of direct mateials cost assigned to ending work-in-process inventory at the end of October = 1.92*1500

Amount of direct mateials cost assigned to ending work-in-process inventory at the end of October = $ 2880

Working

Calculation of Equivalent Unit (as per FIFO Method) Unit Direct Material Conversion Cost % of Completion Equivalent Unit % of Completion Equivalent Unit Beginning WIP 2500 0% 0 75% 1875 Unit Started & Completed 8500 100% 8500 100% 8500 Closing WIP 1500 100% 1500 50% 750 Total Equivalent Unit 10000 11125

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