Assigning Costs: FIFO Costing Method
Pearl Glaze adds direct materials at the beginning of its production process and adds conversion costs uniformly throughout the process. Given the following information from Pearl Glaze’s records for July and using Steps 1 and 2 of the FIFO costing method, assign costs to the units transferred out and to the units in ending inventory for July.
| Units in beginning inventory | 3,000 | ||
| Units started during the period | 17,000 | ||
| Units partially completed in prior period | 2,500 | ||
| Percentage of completion of ending | 100% | for direct materials; | |
| work in process inventory | 70% | for conversion costs | |
| Percentage of completion of beginning | 100% | for direct materials; | |
| inventory in prior period | 40% | for conversion costs |
| Equivalent Units of Production | |
| Direct materials | 17,000 |
| Conversion costs | 18,050 |
| Beginning Work in Process | Costs for the Period | |
| Direct materials | $7,600 | $20,400 |
| Conversion costs | 2,545 | 32,490 |
| Cost per equivalent unit | |
| Direct materials | $1.20 |
| Conversion costs | $1.80 |
| Total Costs | |
| Costs of goods manufactured and transferred out: | |
| From beginning inventory | $ |
| Current costs to complete | |
| Units started and completed this period | |
| Cost of goods manufactured | $ |
| Ending inventory | |
| Total costs |
$ |
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