Problem 16-7AA FIFO: Process cost summary, equivalent units, cost estimates LO C

Question

Problem 16-7AA FIFO: Process cost summary, equivalent units, cost estimates LO C2, C3, C4, P4

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Dengo Co. makes a trail mix in two departments: roasting and blending. Direct materials are added at the beginning of each process, and conversion costs are added evenly throughout each process. The company uses the FIFO method of process costing. During October, the roasting department completed and transferred 23,000 units to the blending department. Of the units completed, 3,400 were from beginning inventory and the remaining 19,600 were started and completed during the month. Beginning work in process was 100% complete with respect to direct materials and 40% complete with respect to conversion. The company has 2,800 units (100% complete with respect to direct materials and 80% complete with respect to conversion) in process at month-end. Information on the roasting department’s costs of beginning work in process inventory and costs added during the month follows.

Problem 16-7A Part 2

2. Prepare the journal entry dated October 31 to transfer the cost of completed units to the blending department. (Do not round your intermediate calculations.)

Cost Direct Materials Conversion Of beginning work in process inventory $ 10,300 $ 111,690 Added during the month 266,560 1,117,584

Explanation / Answer

Solution 2:

Meetha Corporation Roasting Department Computation of Equivalent unit (FIFO) Particulars Physical units Material Conversion Units to be accounted for: Beginning WIP Inventory 3400 Units started this period (23000 + 2800 - 3400) 22400 Total unit to be accounted for 25800 Units Accounted for: Units completed and transferred out From beginning inventory
Material - 0%
Conversion - 60% 3400 0 2040 Started and completed currently 19600 19600 19600 Units in ending WIP
Material - 100%
Conversion - 80% 2800 2800 2240 Total units accounted for 25800 22400 23880

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