AJ\'s Bakery bakes apple fritters for sale to area grocery stores. The company u

Question

AJ's Bakery bakes apple fritters for sale to area grocery stores. The company uses the FIFO method of process costing to account for the cost of the apple fritters it produces. Raw materials (flour, sugar, flavoring, apples) and conversion costs are incurred at the same rate during the production process. Data for AJ's Bakery are as follows: How many units were completed in December? How many equivalent units were completed in December for raw materials and conversion costs? What is the cost per equivalent unit for raw materials and conversion costs? What is the cost of ending WIP? What is the cost of the units transferred out of work in process inventory to finished-goods inventory? That is, what is the cost of goods manufactured during December?

Explanation / Answer

A How Many units were completed in December? Opening WIP 4000 Add: Started during December 50000 Less : Closing WIP 11000 Units were completed in December 43000 B How Many Equivalent units were completed in December for Raw Material & Conversion cost? Raw material Conversion cost Unit % of Completion Equivalent Unit % of Completion Equivalent Unit Opening WIP 4000 10 400 40 1600 Started & Completed during December 39000 100 39000 100 39000 Closing WIP 11000 90 9900 60 6600 Total Equivalent Unit were Completed 49300 47200 Total Equivalent Unit were Completed For Raw Material 49300 For Conversion Cost 47200 C What is the Cost per Equivalent Unit for Raw Material & Conversion cost? Total Cost Total Equivalent Unit were Completed Cost per Equivalent Unit For Raw Material 40188 49300 $                       0.82 For Conversion Cost 9744 47200 $                       0.21 D What is the cost of Ending WIP Total Equivalent Unit were Completed For Ending WIP Cost per Equivalent Unit Total cost For Raw Material 9900 $                       0.82 $               8,118.00 For Conversion Cost 6600 $                       0.21 $               1,386.00 Cost of Ending WIP $               9,504.00 E What is the cost of Unit Transferred Out of Work in Process Inventory to Finished Good Cost of Beginning WIP $               3,108.00 Add: Cost Incured during December $             49,932.00 Less: Cost of Ending WIP $               9,504.00 Cost of Unit Transferred Out of Work in Process Inventory to Finished Good $             43,536.00

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