Question

2) Shining Star Company uses an automated process to clean and polish its souvenir items. For March, the company had the following activities: Required: Prepare a production cost worksheet using the FIFO method.

Beginning work in process inventory	3,000 items, 1/3 complete with regards to conversion costs
Units placed in production	12,000 units
Units completed	9,000 units
Ending work in process inventory	6,000 items, 2/5 complete with regards to conversion costs
Cost of beginning work in process	$2,500
Direct material costs, current	$9,000
Conversion costs, current	$8,320

Direct materials are placed into production at the beginning of the process and conversion costs are incurred evenly throughout the process.

Assignment of costs
Work in process, beginning
Completion of beginning
Total beginning inventory
Started and Completed
Total costs transferred out		$13,400
Work in process, ending
Direct materials
Conversion
Costs accounted for		$19,820

Answer 1

Direct materials are placed into production at the beginning of the process and conversion costs are incurred evenly throughout the process.

Assignment of costs
Work in process, beginning		2500
Completion of beginning (2000*.80)		1600
Total beginning inventory		4100
Started and Completed		9300
Total costs transferred out		$13,400
Work in process, ending
Direct materials	4500
Conversion	1920	6420
Costs accounted for		$19,820

Direct material equivalent unit = 6000+6000 = 12000 Cost per equivalent unit of direct material = 9000/12000 = 0.75

Conversion equivalent unit = (3000*2/3+6000*100%+6000*2/5) = 10400 cost per equivalent unit = 8320/10400 = 0.80