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The Matsui Lubricants plant uses the FIFO method to account for its work-in-process inventories. The accounting...

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Accounting

The Matsui Lubricants plant uses the FIFO method to account forits work-in-process inventories. The accounting records show thefollowing information for a particular day: Beginning WIP inventoryDirect materials $ 951 Conversion costs 452 Current period costsDirect materials 14,690 Conversion costs 11,928 Quantityinformation is obtained from the manufacturing records and includesthe following: Beginning inventory 400 units (60% complete as tomaterials, 55% complete as to conversion) Current period unitsstarted 5,200 units Ending inventory 1,400 units (40% complete asto materials, 20% complete as to conversion)

(1) Compute the equivalent units for the materials andconversion cost calculations.

(2) Compute the cost per equivalent unit for direct materialsand for conversion costs using the FIFO method. (Round your answersto 2 decimal places.)

(3)Compute the cost of goods transferred out and the endinginventory using the FIFO method. (Do not round intermediatecalculations.)

Answer & Explanation Solved by verified expert
4.2 Ratings (907 Votes)

1) Computation of equivalent unit
Particulars unit % material % conversion
beginning WIP 400 40% 160 45% 180
completed (400+5200-1400)-400 3800 100% 3800 100% 3800
ending WIP 1400 40% 560 20% 280
Equivalent unit of production 5600 4520 4260
2)     Cost per equivalent unit
Particulars Direct material conversion total
cost during the month (1) 14690 11928 26618
equivalent unit (2) 4520 4260
cost per EUP (1)/2 3.25 2.8 6.05
3) Cost reconciliation schedule
Particulars amount
cost at beginning(951+452) 1403
cost during the year(14690+11928) 26618
cost to be accounted for 28021
tranferred to finished goods
Cost of beginning WIP 1403
COST Incurred (160*3.25),(180*2.8) 1024
total cost at beginning WIP 2427
stared & completed (4200*6.05) 25410
cost of unit transferred out 27837
cost of Ending WIP
material (560*3.25) 1820
conversion (280*2.8) 784
total cost of WIP ending 2604
total cost 30441

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