=+5-43 KKK FIFO method (continuation of 5-42) (Appendix 5-1)

Redo Problem 5-42 using the FIFO method of process costing. The Assembly Department introduced a new process in October.

It was hoped that the process would reduce the conversion cost. However, it would require more expensive direct materials. Was the net effect of the new process positive? Explain why the FIFO method is necessary to answer this question. Show the journal entry to record the transfer of completed units from the Assembly Department to the Testing Department.

5-44 KKK Job costing—service industry OBJECTIVES 4, 7 Michael McClean books tours for religious bands and arranges to print T-shirts and produce ‘demo’ CDs to sell on the tour. McClean’s agency uses a normal costing system with two direct cost pools, labour and materials, and two indirect cost pools, general overhead and logistics. General overhead is allocated to each tour at 195% of labour cost and logistics overhead is allocated at 110% of materials cost. The following information relates to the agency for June 2014:

1 As of 1 June, there were tours for two bands, Grace Beknown and Everlasting, in progress.