Tamar Co. manufactures a single product in one department. All
direct materials are added at the beginning of the manufacturing
process. Conversion costs are added evenly throughout the process.
During May, the company completed and transferred 28,200 units of
product to finished goods inventory. Its 4,200 units of beginning
work in process consisted of $73,980 of direct materials and
$1,308,684 of conversion costs. It has 3,000 units (100% complete
with respect to direct materials and 80% complete with respect to
conversion) in process at month-end. During the month, $656,100 of
direct material costs and $2,669,316 of conversion costs were
charged to production.
Assume that Tamar uses the FIFO method to account for its process costing system.
2. Prepare the journal entry dated May 31 to
transfer the cost of completed units to finished goods
Equivalent unit of material = (4200*0%+24000+3000*100%) = 27000
Equivalent unit of conversion = (4200*60%+24000+3000*80%) = 28920
Cost per equivalent unit of material = 656100/27000 = 24.3
Cost per equivalent unit of conversion = 2669316/28920 = 92.3
Cost of unit transferred out = (24000*24.3+26520*92.30+73980+1308684) = 4413660
|Date||account and explanation||Debit||Credit|
|May 31||Finished goods||4413660|
|Work in process||4413660|
|(To record goods completed)|
Get Answers For Free
Most questions answered within 1 hours.