Apply the Concepts: FIFO and Weighted Average

Scenario 1: Dormir produces a liquid herbal sleep remedy. Production begins in the Blending Department. All materials are added at the beginning of the blending process. Output is measured in ounces. The production data for June are as follows:

Production:
Units in process, June 1, 70% complete*	6,000
Units completed and transferred out	36,000
Units in process, June 30, 40% complete*	12,000
* With respect to conversion cost

Complete the physical flow schedule given below. There are a number of useful relationships. For example, Units Started and Completed = Units Completed Units in BWIP and Units Started = Units Completed Units in EWIP

Units to Account for:

Units in BWIP
Units started
Total units to account for
Units accounted for:
Units Completed:
From: BWIP
Started and completed
Units in BWIP
Total units accounted for

Prepare the Equivalent Unit Schedules for FIFO and Weighted Average by completing the Table below. Since inputs are non-uniform, equivalent units must be calculated separately for calculated for materials and conversion inputs. If an amount box does not require an entry, leave it blank or enter "0".

	FIFO				WEIGHTED AVERAGE
	Direct Materials		Conversion		Direct Materials		Conversion
Units Completed
Units Started and Completed
Units in BWIP Fraction to Complete
Units in EWIP Fraction Complete
Equivalent Units

Using the following cost data for the Blending Department for the month of June, calculate the unit cost for FIFO and Weighted Average (complete the table following cost data). The unit cost is the sum of the unit materials cost and the unit conversion cost. Round unit cost to two decimal places.

Costs:

Work in Process, June 1:
Direct materials	$600
Conversion costs	210
Total work in process	$810
Current costs:
Direct materials	$7,560
Conversion costs	1,830
Total current costs	$9,390

	FIFO			WEIGHTED AVERAGE
	Materials	Conversion	Total	Materials	Conversion	Total
Numerator (costs)	$	$		$	$
Denominator (equivalent units)
Unit Cost	$	$	$	$	$	$

Calculate the cost of goods transferred out and the cost of EWIP for both FIFO and Weighted Average by completing the following Tables (Round unit cost to two decimal places.):

	FIFO
Costs, BWIP	$
Cost to Complete BWIP
Cost of Goods Started and Completed
Cost of Goods Transferred Out	$

	Weighted Average
Cost of Goods Transferred Out	$

FIFO	Materials	Conversion	Total Cost of EWIP
Equivalent units in EWIP
Unit cost	$	$
Cost of EWIP	$	$	$

Weighted Average	Materials	Conversion	Total Cost of EWIP
Equivalent units in EWIP
Unit cost	$	$
Cost of EWIP	$	$	$

Show that the costs to account for equal the costs assigned for both FIFO and Weighted Average by completing the following information.

Costs to account for:
Costs BWIP	$
Costs added (current)
Total costs to account for

	FIFO		Weighted Average
Cost of goods transferred out	$		$
Cost of EWIP
Total Cost Assigned	$		$