Problem 3. A company uses the FIFO method to account for its work in process inventories. Theaccounting records show the following information:* uIt 1011owing information:Beginning work in process inventoryMaterialsConversion costsDebits to work in process inventory this period:P360180MaterialsConversion costsP 3,7142,258Units:Beginning inventoryPercent of completion (materials, 60%, conversion cost, 30%)Started this periodEnding inventoryPercent of completion:(materials, 40%, conversion cost, 20%)300 units2,000 units600 unitsRequirements:1. Compute the equivalent units for materials and conversion costs.2. Compute the unit cost for materials and conversion costs.• 3. Compute the cost of goods transferred out.4. Compute the cost of the ending inventory.

Calculation of all requirement with necessary workings are as follows.

Requirements: • 1. Compute the equivalent units for materials and conversion costs. • 2. Compute the unit cost for materials and conversion costs. • 3. Compute the cost of goods transferred out. • 4. Compute the cost of the ending inventory.

Requirements: • 1. Compute the equivalent units for materials and conversion costs. • 2. Compute the unit cost for materials and conversion costs. • 3. Compute the cost of goods transferred out. • 4. Compute the cost of the ending inventory.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Problem 3. A company uses the FIFO method to account for its work in process inventories. The
accounting records show the following information:
* uIt 1011owing information:
Beginning work in process inventory
Materials
Conversion costs
Debits to work in process inventory this period:
P
360
180
Materials
Conversion costs
P 3,714
2,258
Units:
Beginning inventory
Percent of completion (materials, 60%, conversion cost, 30%)
Started this period
Ending inventory
Percent of completion:(materials, 40%, conversion cost, 20%)
300 units
2,000 units
600 units
Requirements:
1. Compute the equivalent units for materials and conversion costs.
2. Compute the unit cost for materials and conversion costs.
• 3. Compute the cost of goods transferred out.
4. Compute the cost of the ending inventory.

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