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The Matsui Lubricants plant uses the FIFO method to account for its work-in-process inventories. The accounting...

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Accounting

The Matsui Lubricants plant uses the FIFO method to account forits work-in-process inventories. The accounting records show thefollowing information for a particular day:

Beginning WIP inventory

Direct materials $ 1,000

Conversion costs 437

Current period costs

Direct materials 15,995

Conversion costs 13,992

Quantity information is obtained from the manufacturing recordsand includes the following:

Beginning inventory 400 units (70% complete as to materials, 55%complete as to conversion)

Current period units started 5,100 units

Ending inventory 1,300 units (50% complete as to materials, 20%complete as to conversion)

Compute the cost of goods transferred out and the endinginventory using the FIFO method. (Do not round intermediatecalculations.)

Answer & Explanation Solved by verified expert
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Solution:

Computation of Equivalent Units of Production (FIFO method)
Whole Units Equivalent units Direct Materials Equivalent units Conversion
Beginning Inventory (30% Material, 45% conversion) 400 120 180
Started and completed during current period (5100-1300) 3800 3800 3800
Transferred To finished Goods 4200 3920 3980
Ending Inventory (50% Material, 20% Conversion) 1300 650 260
Total equivalent units 5500 4570 4240
Computation of Cost per Equivalent Units
Total Direct Materials Conversion
Current period cost $29,987 $15,995 $13,992
/Equivalent Units 4570 4240
Cost per Equivalent unit $3.50 $3.30
Computation of cost of goods transferred out And Ending Inventory
Direct Materials Conversion Total
Equivalent Units in Goods transferred to Finished Goods 3920 3980
*Cost per Equivalent unit $3.50 $3.30
Total Cost of goods transferred out $13,720 $13,134 $26,854
Equivalent units in Ending Inventory 650 260
*Cost per Equivalent unit $3.50 $3.30
Total Cost of ending Inventory $2,275 $858 $3,133

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