Exercise 8-33 & 8-34 (LO 8-5) The Matsui Lubricants plant uses the FIFO method t

Question

Exercise 8-33 & 8-34 (LO 8-5)

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:

Quantity information is obtained from the manufacturing records and includes the following:

Exercise 8-33 Compute Costs per Equivalent Unit: FIFO Method (LO 8-5)

Required:

(1) Compute the equivalent units for the materials and conversion cost calculations.

(2) Compute the cost per equivalent unit for direct materials and for conversion costs using the FIFO method. (Round your answers to 2 decimal places.)

Exercise 8-34 Assign Costs to Goods Transferred Out and Ending Inventory: FIFO Method (LO 8-5)

Compute the cost of goods transferred out and the ending inventory using the FIFO method. (Do not round intermediate calculations.)

Beginning WIP inventory Direct materials $ 955 Conversion costs 482 Current period costs Direct materials 16,310 Conversion costs 13,566

Explanation / Answer

Calculate equivalent unit :

Equivalent unit of material = (550*40%+3800*100%+1600*40%) = 4660 units

Equivalent unit of conversion = (550*44%+3800*100%+1600*30%) = 4522 units

Calculate cost per equivalent unit:

Direct material = 16310/4660 = 3.5 per equivalent unit

Conversion cost = 13566/4522 = 3 per equivalent unit

Compute the cost of goods transferred out and the ending inventory using the FIFO method.

Cost of goods transferred out = (4020*3.5+4042*3)+(955+482) = 27633

Cost of ending inventory = (640*3.5+480*3) = 3680

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