Question

Refer to the information in Exercise 16-9 and complete parts 1 and 2 using the FIFO method

Short answer

1. Cost per equivalent unit:

Material: $2.49

Conversion: $1.94

2. Cost transferred to ending work-in-process inventory: $211,068.

Step-by-step solution

Definition of Finished Goods

Finished goods can be defined as all those goods held by the business entity that has passed all the processes of the product and is now ready for sale. These goods are reported as a resource of the business.

Calculation of cost per equivalent units

For material:

Particular	Amount $
Beginning inventory	$118,472
Add: Incurred during the period.	850,368
Total cost	$968,840
Equivalent units	389,600
Cost per equivalent units	$2.49

For conversion:

Particular	Amount $
Beginning inventory	$48,594
Add: Incurred during the period.	649,296
Total cost	$697,890
Equivalent units	360,600
Cost per equivalent units	$1.94

Working note: Calculation of equivalent units:

Particular	Material
Beginning inventory	24,000
Units started and completed	300,000
Less: Ending inventory	65,600
Equivalent units	389,600

Particular	Conversion
Beginning inventory	36,000
Units started and completed	300,000
Less: Ending inventory	24,600
Equivalent units	360,600

Cost of units transferred to finished goods and ending work-in-process

Particular	Amount $
Cost of goods finished and transferred out.	$1,329,000
Cost of ending work-in-process	211,068
Total cost	$1,540,068