2. Felicity Feathers Inc. makes feather pillows. The manufacturing takes place i

Question

2. Felicity Feathers Inc. makes feather pillows. The manufacturing takes place in two departments: the sewing department and the stuffing department. The sewing department cuts the cover for the pillow from cotton fabric, sews it together and adds a zipper to allow input of the feather stuffing. The stuffing department fills the pillow covers with feather down, and inspects and packages the pillows for sale Felicity uses process costing to determine its product costs. All materials for each department are added at the beginning of the process, and conversion costs are added evenly throughout The following details are available for June production in the sewing department Beginning inventory Number of pillows Direct materials Conversion cost Per cent completion 480 $5,328 $1,300 25% Month of June activity Number of pillows started Direct materials added Direct labour added Manufacturing overhead Number of pillows completed Per cent completion of ending inventory 5,600 $61,600 $31,056 $26,624 5,440 70% The company uses the first in, first out (FIFO) method. What is the cost of the pillows in ending inventory in the sewing department for June? a) $10,873 b) $11,533 c) $11,520 d) $12,230

Explanation / Answer

Solution:

Hence option c is correct.

Felicity Feather Inc. Sewing Department Computation of Equivalent unit (FIFO) Particulars Physical units Material Conversion Units to be accounted for: Beginning WIP Inventory 480 Units started this period 5600 Total unit to be accounted for 6080 Units Accounted for: Units completed and transferred out From beginning inventory
Material - 0%
Conversion - 75% 480 0 360 Started and completed currently 4960 4960 4960 Units in ending WIP
Material - 100%
Conversion - 70% 640 640 448 Total units accounted for 6080 5600 5768

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