FIFO and Weighted Average (5 Steps of Production Report)

Note: If the appendix on FIFO is not assigned by your instructor, answer only the questions dealing with the weighted average method.

Scenario 1: Dolor produces a liquid childrens pain remedy. Production begins in the Mixing Department. All materials are added at the beginning of the mixing process. Output is measured in ounces. The production data for August are as follows:

Production:
Units in process, August 1, 70% complete*	9,000
Units completed and transferred out	54,000
Units in process, August 31, 40% complete*	18,000
* With respect to conversion cost

Step 1: Complete the physical flow schedule

There are a number of useful relationships. For example, Units Started and Completed =Units Completed Units in EWIP and Units Started =Units Started and Completed + Units in EWIP .

Units to account for:
Units in BWIP		9,000
Units started
Total units to account for
Units accounted for:
Units Completed:
Started and completed
From BWIP	9,000	54,000
Units in EWIP		18,000
Total units accounted fro

Step 2: Prepare the Equivalent Unit Schedules for FIFO and Weighted Average

Complete the table below for Dolor. Since inputs are non-uniform, equivalent units must be calculated separately for materials and conversion inputs.

	FIFO	FIFO	WEIGHTED AVERAGE	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

Step 3: Calculate the unit cost for FIFO and Weighted Average

Complete the table for Dolor using the following cost data for the Mixing Department for the month of August. The unit cost is the sum of the unit materials cost and the unit conversion cost (round the unit cost to the nearest cent).

Costs:
Work in Process, August 1:
Direct materials	$900
Conversion costs	315
Total work in process	$1,215
Current costs:
Direct materials	$11,340
Conversion costs	2,745
Total current costs	$14,085

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

Step 4: Calculate the cost of goods transferred out and the cost of EWIP for both FIFO and Weighted Average

Complete the following tables using the data from Scenario 1:

I. Cost of goods transferred out, FIFO:

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

II. Cost of goods transferred out, Weighted Average:

	Weighted Average
Cost of Goods Transferred Out

III. Valuation of EWIP, FIFO:

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

IV. Valuation of EWIP, Weighted Average:

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

Step 5: Show that the costs to account for equal the costs assigned for both FIFO and Weighted Average

Complete the following information.

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

Costs Accounted for:

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