Question

The Matsui Lubricants plant uses the FIFO method to account for its work-in-process inventories. The accounting records show the following information for a particular day:

Beginning WIP inventory
Direct materials	$	2,100
Conversion costs		700
Current period costs
Direct materials		27,667
Conversion costs		15,574

Quantity information is obtained from the manufacturing records and includes the following:

Beginning inventory	560	units	(60% complete as to materials, 60% complete as to conversion)
Current period units started	3,700	units
Ending inventory	1,300	units	(40% complete as to materials, 20% complete as to conversion)

Required:

Compute the cost of goods transferred out and the ending inventory using the FIFO method. (Do not round your intermediate calculations. Round your final answers to nearest whole dollar value.)

Answer 1

Equivalent unit of production ;

	Whole unit	%	EUP-material	%	EUP-conversion
Beginning inventory	560	40%	224	40%	224
Unit started and completed	2400	100%	2400	100%	2400
Ending inventory	1300	40%	520	20%	260
Total	4260		3144		2884

Cost per equivalent unit of material = 27667/3144 = 8.80

Cost per equivalent unit of conversion = 15574/2884 = 5.40

Cost of goods transferred out = 14.2*2624+2800 = $40061

Cost of ending inventory = (8.8*520+5.4*260) = $5980