Question

Process Costing using First-in-First Out (FIFO) Crone Corporation uses the FIFO method in its processing costing system. The following data concern the company's Assembly Department for the month of October.
Cost in beginning work in process inventory $1,920
Units started and completed this month 3,130

Materials Conversion:

Cost per equivalent unit $9.50 $20.40
Equivalent units required to complete the units in
beginning work in process inventory 360 140
Equivalent units in ending work in process inventory 330 264


Required:
a. Determine the cost of ending work in process inventory
b. Determine the cost of units transferred out of the department during October.

Answer 1

Answer:

Cost of ending inventory= $8,520.6

Total cost  of units transferred out=$99,863

Explanation:

Cost of ending inventory

Cost of items of inventory = cost per equivalent unit × No of units

Cost of items of inventory =  ($9.50×330) +  ($20.40 × 264)= $8,520.6

Total cost of units transferred out

The FIFO method of valuation of working in progress separates the units transferred out into opening inventory and fully worked.

The fully worked represents the units of inventory started and completed in the sames period.

The cost of units transferred out is the sum of h opening inventory and he fully worked. This done below:

Opening inventory = ($9.50 × 360)   + ($20.40×140)= 6276

Transferred of fully worked =  $(9.50 +$20.40) ×  3,130= 93,587

Total cost  of units transferred out =  (6276 +93587)=  $99,863