Question

The ABBA Company began uses FIFO process costing in its only department. All direct materials are added at the beginning of processing. The ending Work in Process for June consisted of 1,500 units that were 20% complete as to processing. These 1,500 units were charged a total of $12,000 for direct materials and $1,800 for conversion costs during June.

In July, the company started 13,500 units and completed 12,000 units. The ending Work in Process for July consisted of 1,000 units that were 30% complete as to processing. All spoilage that occurred in July was considered to be normal spoilage. July costs were $106,650 for direct materials and $89,600 for conversion.

Prepare a complete equivalent units chart for July. Remember to use the FIFO method. Copy and paste the following setup into your answer space and fill in the numbers as needed. You will have to determine how many columns are needed and what they are.

To finish the beginning Work in Process

Started and Completed

To start the ending Work in Process

Normal Spoilage

Total equivalent units

Refer to question 33. Compute the unit costs for July using the FIFO method. Round your answers to the nearest cent, if needed.

Refer to questions 33 and 34 as needed.  Compute the Cost of Goods Manufactured for July using the FIFO method. In order to get partial credit, you will need to show me ALL of the numbers that you add together to get the Cost of Goods Manufactured, please.

Answer 1

Statement of equivalent production					Degree of completion
					Direct Material			Conversion
Particulars	Units	Particulars	Units		%	Units		%	Units
Opening WIP	1500	Transfer to next process:
Units Introduced	13500	From O/p WIP	1500		-	-		80%	1200
		From Current Intro	10500		100%	10500		100%	10500
		Closing WIP	1000		100%	1000		30%	300
		Normal Spoilage	2000		0%	0		0%	0
	15000		15000			11500			12000

Statement of cost per equivalent production
Element of costs	Units	Costs	Cost/eq. units
Direct Material	11500	$      106,650.00	$                  9.27
Conversion	12000	$        89,600.00	$                  7.47
			$                16.74

Statement of evaluation
Cost of Units Transferred Out
Existing cost of 1500 units =		$       13,800.00	($ 12000 + $ 1800))
Cost of Completing 1200 units:
Conversion cost =		$         8,960.00	( 1200 x $ 7.47)
Cost of 10500 units =		$     175,776.09	(10500 x $ 16.74)
	Total	$     198,536.09
Cost of Ending WIP
	Units	Cost/eq. units	Costs
Direct Material	1000	$                 9.27	$      9,273.91
Conversion	300	$                 7.47	$      2,240.00
		Total	$    11,513.91

Is this okay?