Explanation First in and first out (FIFO) method: Under this method cost of units sold and units lying as ending inventory is ascertained on the first in and first out basis. It means units entered in the store first would be sold out first. Prepare a production cost report for June for the Blending Department. E Products Blending Department Production Cost Report Particulars Physical units Prior department Materials Conversion Beginning work-in-process inventory 9,000 Units started this period 116,000 Total units 125,000 Completed and transferred out Beginning work-in-process inventory 9,000 - 9,000 6,300 (70%) Started and currently completed 106,000 106,000 106,000 106,000 Units in ending work-in-process inventory 10,000 10,000 10,000 (100%) 6,000 (60%) Total units 125,000 116,000 125,000 118,300 Table: (1) Compute the cost per equivalent unit of prior department, materials, and conversion: Particulars Total Prior department Materials Conversion Costs in beginning work-in-process inventory $ 28,875 $ 10,540 $ 0 $ 18,335 Current period costs $ 1,077,725 $ 151,960 $ 387,500 $ 538,265 Total costs $ 1,106,600 $ 162,500 $ 387,500 $ 556,600 Cost per equivalent unit Prior department $ 1.31(1) Materials $ 3.10(2) Labor $ 4.55(3) Manufacturing overhead Table: (2) Compute the total cost of prior department, materials, and manufacturing overhead: Particulars Total Prior department Materials Conversion Costs accounted for: Costs assigned to units transferred out: Costs from beginning WIP inventory $ 28,875 $10,540 0 $18,335 Current costs added to complete beginning WIP inventory $ 85,440 $0 $27,900 (4) $28,665 (5) Current costs of units started and completed $ 949,760 $138,860 (6) $328,600 (7) $482,300 (8) Costs assigned to ending WIP inventory $ 71,400 $ 13,100 (9) $31,000 (10) $27,300 (11) Total costs accounted for $ 1,106,600 $ 162,500 $ 387,500 $ 556,600 Table: (3) Working note 1: Compute the cost per equivalent unit: Cost per equivalent unit = Current period costs Total units accounted for = $ 151 , 960 116 , 000 = $ 1.31 Working note 2: Compute the cost per equivalent unit: Cost per equivalent unit = Current period costs Total units accounted for = $ 387 , 500 125 , 000 = $ 3.10 Working note 3: Compute the cost per equivalent unit: Cost per equivalent unit = Current period costs Total units accounted for = $ 538 , 265 118 , 300 = $ 4

Connect Access Card For Fundamentals Of Cost Accounting

6th Edition

ISBN: 9781260708738

Author: William N. Lanen Professor, Shannon Anderson Associate Professor, Michael W Maher

Publisher: McGraw-Hill Education

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Chapter 8, Problem 56P

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Prepare a production cost report for June for the Blending Department.

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Connect Access Card For Fundamentals Of Cost Accounting

Ch. 8 - What are the characteristics of industries most...Ch. 8 - A manufacturing company has records of its...Ch. 8 - If costs increase from one period to another, will...Ch. 8 - What are the five steps to follow when computing...Ch. 8 - What is the distinction between equivalent units...Ch. 8 - Which method, weighted-average or FIFO, better...Ch. 8 - It has been said that a prior departments costs...Ch. 8 - The more important individual unit costs are for...Ch. 8 - Assume that the number of units transferred out of...Ch. 8 - The management of a liquid cleaning product...

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