ANSWER ALL PARTS. DO NOT SKIP ANY PART. ATTEMPT ONLY IF YOU CAN EXPLAIN EACH PAR

Question

ANSWER ALL PARTS. DO NOT SKIP ANY PART. ATTEMPT ONLY IF YOU CAN EXPLAIN EACH PART STEP BY STEP

Jarvene Corporation uses the FIFO method in its process costing system. The following data are for the most recent month of operations in one of the company’s processing departments:




Units in beginning inventory 390
Units started into production 4,290
Units in ending inventory 340
Units transferred to the next department 4,340


Materials Conversion
Percentage completion of beginning inventory 80 % 20 %
Percentage completion of ending inventory 70 % 30 %


The cost of beginning inventory according to the company’s costing system was $7,833 of which $4,865 was for materials and the remainder was for conversion cost. The costs added during the month amounted to $177,160. The costs per equivalent unit for the month were:



Materials Conversion
Cost per equivalent unit $18.00 $23.00


Required:

1. Compute the total cost per equivalent unit for the month.

2. Compute the equivalent units of material and conversion in the ending inventory.

3. Compute the equivalent units of material and conversion that were required to complete the beginning inventory.

4. Compute the number of units started and completed during the month.

5. Compute the cost of ending work in process inventory for materials, conversion, and in total for the month.

6. Compute the cost of the units transferred to the next department for materials, conversion, and in total for the month.

Explanation / Answer

1. Total cost per equivalent unit = Cost per equivalent unit for materials + Cost per equivalent unit for conversion = $18 + $23 = $41

2. Equivalent units of material and conversion in ending inventory

Materials: 340 x 70% = 238

Conversion: 340 x 30% = 102

3. Equivalent units of material and conversion required to complete beginning inventory

Materials: 390 x 20% = 78

Conversion: 390 x 80% = 312

4. Number of units started and completed = Number of units transferred to the next department - Number of units in beginning inventory = 4340 - 390 = 3950

5. Cost of ending work in process inventory

Materials: 238 x $18 = $4284

Conversion: 102 x $23 = $2346

Total: $4284 + $2346 = $6630

6. Cost of units transferred to the next department

Materials Conversion Total Cost of beginning work in process 4865 2968 7833 Cost incurred on beginning work in process 1404 7176 8580 (78 x $18) (312 x $23) Cost of units started and completed 71100 90850 161950 (3950 x $18) (3950 x $23) Total cost of units transferred out 77369 100994 178363

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