Chapter 18: Q23RQ (page 1006)
Describe the three groups of units that must be accounted for when using the FIFO method.
Under the FIFO method, the following three groups of units must be accounted for:
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Smith Paper Co. produces the paper used by wallpaper manufacturers. Smith’s four-stage process includes mixing, cooking, rolling, and cutting. On March 1, the Mixing Department had 400 rolls in process. During March, the Mixing Department completed the mixing process for those 400 rolls and also started and completed the mixing process for an additional 4,100 rolls of paper. The department started but did not finish the mixing process for an additional 500 rolls, which were 20% complete with respect to both direct materials and conversion work at the end of March. Direct materials and conversion costs are incurred evenly throughout the mixing process. The Mixing Department compiled the following data for March:
Direct materials | Direct labor | Manufacturing overhead allocated | Total costs | |
Beginning inventory, Mar. 1 | \(475 | \)275 | \(300 | \)1,050 |
Costs added during March | 5,045 | 2,900 | 2,965 | 10,910 |
Total costs | \(5,520 | \)3,175 | \(3,265 | \)11,960 |
Requirements
1. Prepare a production cost report for the Mixing Department for March. The company uses the weighted-average method.
2. Journalize all transactions affecting the company’s mixing process during March. Assume labor costs are accrued and not yet paid.
Question: What are the four steps in preparing a production cost report?
Question: List ways in which job order costing systems are similar to process costing systems.
Brian’s Frozen Pizzas uses FIFO process costing. Selected production and cost data follow for April 2018.
Prepping department | |
Units to account for: | |
Beginning work-in-process, March 31 | 20,000 |
Started in April | 45,000 |
Total units to account for | 65,000 |
Units accounted for: | |
Completed and transferred out during April: | |
From beginning work-in-process inventory | 20,000 |
Started and completed during April | 30,000 |
Ending work-in-process, April 30 | 15,000 |
Total units accounted for | 65,000 |
Requirements
1. Calculate the following:
a. On March 31, the Prepping Department beginning Work-in-Process Inventory was 75% complete for materials and 55% complete for conversion costs. This means that for the beginning inventory % of the materials and % of the conversion costs were added during April.
b. On April 30, the Prepping Department ending Work-in-Process Inventory was 60% complete for materials and 85% complete for conversion costs. This means that for the ending inventory % of the materials and % of the conversion costs were added during April.
2. Use the information in the table and the information in Requirement 1 to compute the equivalent units of production for direct materials and conversion costs for the Prepping Department.
Work Problem P18-33A using the FIFO method. The Mixing Department beginning work in process of 300 units is 40% complete as to both direct materials and conversion costs. Round equivalent unit of production costs to four decimal places. Round all other costs to the nearest whole dollar.
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