Please help me with an accounting question Jarvene Corporation uses the FIFO met
ID: 2416592 • Letter: P
Question
Please help me with an accounting question
Jarvene Corporation uses the FIFO method in its process costing system. The following data are for the most recent month of operations in one of the company's processing departments: Units in beginning inventory 400 3,000 Units started into production Units in ending inventory 300 3,100 Units transferred to the next department Materials Conversion Percentage completion of beginning 80% 40% inventory Percentage completion of ending inventory 70% 60% The cost of beginning inventory according to the company's costing system was $11,040 of which $8,120 was for materials and the remainder was for conversion cost. The costs added during the month amounted to $132,730. The costs per equivalent unit for the month were Materials Conversion Cost per equivalent unit $25.40 $18.20 Required: 1. Compute the total cost per equivalent unit for the month. (Round your answer to 2 decimal places. Total cost per equivalent unit 2. Compute the equivalent units of material and of conversion in the ending inventory Materials Conversion Equivalent units of production Compute the equivalent units of material and of conversion that were required to complete the beginning nventory Materials Conversion Equivalent units of production 4. Determine the number of units started and completed during the month. Number of units started and completed 5. Determine the costs of ending inventory and units transferred out. Total cost of ending inventory Total cost of units transferred outExplanation / Answer
Solution:
1).
Equivalent cost per unit = Equivalent Cost of material per unit + Equivalent Cost of Conversion per unit
= 25.4 + 18.20
= $43.60
2).
Equivalent units of material & coversion costs in ending inventory:
Total closing inventory = 300units
Equivalent units = Number of units * Percentage of Completion
For material For Conversion costs
Percentage of completion 70% 60%
Equivalent units 210 units 180 units
3). Number of units available in opening stock
For material For Conversion costs
Percentage completed in 80% 40%
previous month
Percentage completion
required in this month 20% 60%
Equivalent units = 400 * 20% = 400 * 60%
Equivalent units 80 units 240 units
4).
Company is following FIFO method so first opening stock will be transferred out.
Opening inventory = 400 units
Number of units started during month = 3000 units
Number of units transferred out = 3100 units
Number of units started & finished during the month = 3100 - 400
= 2700 units
5).
Total Cost of Ending inventory:
= Equivalent units of material * Equivalent cost of material per unit + Equivalent units of conversion * Equivalent cost of conversion per unit
= 210 * 25.4 + 180 * 18.20
= $8610
Total Cost of units tranferred out ;
=Total Equivalent units * Total Equivalent cost per unit
= 3100 * 43.60
= $135160