FIFO Method, Two-Department Analysis

Muskoge Company uses a process-costing system. The company manufactures a product that is processed in two departments: Molding and Assembly. In the Molding Department, direct materials are added at the beginning of the process; in the Assembly Department, additional direct materials are added at the end of the process. In both departments, conversion costs are incurred uniformly throughout the process. As work is completed, it is transferred out. The following table summarizes the production activity and costs for February:

		Molding		Assembly
Beginning inventories:
Physical units		10,000		8,000
Costs:
Transferred in				$45,300
Direct materials		$22,000
Conversion costs		$13,800		$16,900
Current production:
Units started		25,000		?
Units transferred out		30,000		35,000
Costs:
Transferred in				?
Direct materials		$56,750		$39,550
Conversion costs		$103,500		$143,000
Percentage of completion:
Beginning inventory		40%		50%
Ending inventory		80		50

Required:

1. Using the FIFO method, prepare the following for the Molding Department:

a. A physical flow schedule

Units to account for:
Units, beginning work in process		10,000
Units started in February (transferred in)		25,000
Total units to account for		35,000
Units accounted for:
Units completed and transferred out:
Started and completed	20,000
From beginning work in process	10,000
Units, ending work in process	5,000
Total units accounted for		35,000

b. An equivalent units calculation

	Total Equivalent Units
Direct Materials	25,000
Conversion Costs	30,000

c. Calculation of unit costs. Round your answer to the nearest cent. $ per unit

d. Cost of ending work in process and cost of goods transferred out. Cost of ending work in process: $ Cost of goods transferred out: $

e. A cost reconciliation.

Costs to account for:
Beginning work in process	$35,800
Costs incurred
Total costs to account for	$

Costs accounted for:
Transferred out	$
Ending work in process
Total costs accounted for	$

2. Prepare journal entries that show the flow of manufacturing costs for the Molding Department. (a) Materials are added at the beginning of the process, (b) conversion costs are recorded, and (c) units are transferred to the Assembly Department.

(a)	work in process-molding	___________
	materials inventory		_______________
(b)	work in process-molding	103,500
	conversion costs-control		103,500
(c)	work in process -assembly	_____________
	work in process -molding		_____________

3. Repeat Requirements 1 and 2 for the Assembly Department.

a. A physical flow schedule

Muskoge Company
Assembly Department
Physical Flow Schedule
Units to account for:
units, beginning work in process	8000
units started in Feb (transferred in)	30,000
Total units to account for	38,000
Units accounted for:
Units completed and transferred out:
started & completed	27000
from beg work in process	8000
units, ending work in process	3000
Total units accounted for	38000

b. An equivalent units calculation

	Total Equivalent Units
Direct Materials
Conversion Costs	32,500
Transferred In

c. Calculation of unit costs. If required, round your intermediate computations and final answer to four decimal places and use the rounded answer in subsequent computations. $ per unit

d. Compute the following. For interim computations, carry amounts out to four decimal places. Round your final answers to the nearest dollar. Cost of ending work in process: $ Cost of goods transferred out: $

e. A cost reconciliation. When necessary, round equivalent cost per unit to four decimal places, and round all other amounts to the nearest dollar.

Costs to account for:
Beginning work in process	$_____
Costs incurred	_______
Total costs to account for	$_______

Costs accounted for:
Transferred out	$____
Ending work in process	_____
Total costs accounted for	$_____

Note: Cost reconciliation totals differ by $1 due to rounding error.

Prepare journal entries that show the flow of manufacturing costs for the Assembly Department. (a) Materials are added at the end of the process, (b) conversion costs are recorded, and (c) the units are transferred to Finished Goods.

(a)	work in process-assembly	__________
	materials inventory		________
(b)	work in process-assembly	__________
	conversion costs-control		_________
(c)	finished goods	_________
	work in process-assembly		_________