(APPENDIX) FIRST-IN, FIRST-OUT METHOD; JOURNAL ENTRIES Seacrest Company uses a process-costing system. The company manufactures a product that is processed in two departments, A and B. As work is completed, it is transferred out. The following summarizes the production activity and costs for November:

Department A Department B Beginning inventories:

Physical units 5,000 8,000 Costs:

Transferred in — $45,320 Direct materials $10,000 —

Conversion costs $6,900 $16,800 Current production:

Units started 25,000 ?

Units transferred out 28,000 33,000 Costs:

Transferred in — ?

Direct materials $57,800 $37,950 Conversion costs $95,220 $128,100 Percentage completion:

Beginning inventory 40% 50%

Ending inventory 80% 50%

Required:

. Using the FIFO method, prepare the following for Department A:

a. A physical flow schedule.

b. An equivalent unit calculation.

c. Calculation of unit costs. Round to two decimal places.

d. Cost of EWIP and cost of goods transferred out.

e. A cost reconciliation.

. Prepare journal entries that show the flow of manufacturing costs for Department A. Use a conversion cost control account for conversion costs. Many firms are now combining direct labor and overhead costs into one category. They are not tracking direct labor separately. Offer some reasons for this practice.

Problem