Question

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	400
Units started into production	4,330
Units in ending inventory	280
Units transferred to the next department	4,450

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

The cost of beginning inventory according to the company’s costing system was $7,847 of which $4,879 was for materials and the remainder was for conversion cost. The costs added during the month amounted to $180,814. 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.

Answer 1

1) Total Cost per equivalent unit = 18+23 = $41 per unit

2) Equivalent unit in ending inventory

	Material	Conversion
Equivalent unit of ending inventory	280*80% = 224	280*30% = 84

3) Equivalent unit of beginning inventory

	Material	Conversion
Equivalent unit of beginning inventory required to complete	400*20% = 80	400*80% = 320

4) Unit started and completed = 4450-400 = 4050 Units

5) Calculate cost of ending work in process

	Material	Conversion	Total
Total Cost of ending work in process	224*18 = 4032	84*23 = 1932	5964

6) Calculate cost of unit transferred out

	Material	Conversion	Total
Cost of units completed and transferred out	(4130*18+4879) = 79219	(4370*23+2968) = 103478	182697